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Unformatted text preview: than 1. -Elasticity is less than one.-Quantity is less responsive to price. Unit elastic-Demand is unit elastic with respect to price if price elasticity of demand equals 1. Price Elasticity of Demand Price elasticity is not ht slope of the demand schedule. A straight line demand schedule has a constant slope but varying elasticity along the schedule. Revenue and Price elasticity Revenue = Price x Quantity Raising price by one percent has two opposing effects on revenue. It raises the price paid by loyal customers, thus raising revenue. It lowers the quantity sold thus lowering revenue. Elasticity tells us which of the opposing effects wins the tug of war When elasticity if greater than one The quantity effect on revenue is larger. When elasticity is less than one The Price effect on revenue is larger....
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