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For Educators · Pricing Strategy

Pricing Strategy for a tax policy

Built for educators teaching it to a class. Drop a live demo into a lecture or assign it as a shareable link — no lab installs. Simulate a tax policy live below — adjust the inputs and watch it respond, right in your browser.

Elasticity

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Price Elasticity of DemandLive

how sensitive is quantity?

Controls

Presets

Price

Elasticity measures how much quantity demanded responds to price. Where demand is elastic (|E| > 1), a price cut raises total revenue; where it is inelastic, a price cut lowers revenue. On a straight-line demand curve the top half is elastic, the bottom half inelastic, and revenue peaks exactly at the midpoint where elasticity equals one.

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Data Inspector

Quantity50.0

Elasticity-1.00

Typeunit

Revenue$2500

Governing equation

E_{d} = \frac{d Q}{d P} \cdot \frac{P}{Q} = - \frac{1}{b} \cdot \frac{50}{50.0} = - 1.00

Reading this result: You are at the unit-elastic midpoint: revenue is at its maximum, and small price moves in either direction leave it roughly unchanged.

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Monopoly

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Monopoly PricingLive

market power & deadweight loss

Controls

Presets

Marginal cost

A monopolist maximizes profit where marginal revenue equals marginal cost — then charges the price the demand curve allows. Because MR lies below demand, the monopoly produces less and charges more than a competitive market (where price equals MC). The red triangle is the deadweight loss: mutually beneficial trades that never happen.

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Data Inspector

Monopoly price$65.0

Monopoly qty35.0

Competitive qty70.0

Deadweight loss613

Profit1225

Governing equation

M R = 100 - 2 Q = M C = 30 \Rightarrow Q_{m} = 35.0, P_{m} = $65.0

Reading this result: At MC = $30, the monopolist makes 35 units and charges $65 — a $35 markup over cost. That output is exactly half the competitive 70, and the shaded triangle (613) is the welfare lost to that restraint.

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Frequently asked questions

Is this good for educators?: Yes — this version of "Pricing Strategy for a tax policy" is framed for educators teaching it to a class. Drop a live demo into a lecture or assign it as a shareable link — no lab installs.
Do I need to install anything?: No. It runs in any modern browser, free, with no account required.