Chapter 5 Part VIII -- Revenue and Elasticity

by Elson Blunt on Jun 26, 2014

A 45 degree straight line demand curve can show us the relationship between revenue and elasticity. In the elastic region, revenues shrink when prices are raised. In the inelastic region, revenues grow when prices are raised. When elasticity is 1, revenue is maximized. These are general rules relating revenue and elasticity in any situation.

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