A local paintball business receives total revenue of $10,000 per month when it charges $12 person, and $15,000 in total revenue when it charges $8 per person. Over that range of prices, the business faces:

a. Elastic demand,

b. Unitary demand,

c. Inelastic demand.

Over that range of prices, the business faces a. Elastic demand.

Applying the formula:

Elasticity = ((Qd2 -Qd1 ) / Qd1) / ((P2 - P1) / P1)

=( $15,000-$10,000)/$10,000/($8-$12)/$12

=$5,000/$10,000/-$4/$12

= 1/2/1/3

= .5/.3

= 1.66

When applying the formula, note that we are looking for the absolute value of the elasticity. That means the negative numbers and the dollar signs don't need to be included.

If the result of the calculations is greater than 1, as it is here, we say that the demand is elastic over that range of prices.