Elasticity and total revenue

Elasticity and total revenue - demand due to price...

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Own Price Elasticity and Total Revenue When an item has an inelastic demand, price can go up and total revenue will still increase The opposite is true when price decreases SO, with inelastic demand, Price and Total Revenue go in the same direction
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Own Price Elasticity and Total Revenue When an item has an elastic demand, if price increases, total revenue will decrease The opposite is true when price decreases SO, when an item is elastic, Price and Total Revenue go in the opposite direction
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Own Price Elasticity and Total Revenue So, producers who make products with inelastic demand and less influenced by changes in quantity
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Unformatted text preview: demand due to price fluctuations of their product as their revenue will still increase, even if they raise their price (at least up to the point where the demand for their product turns elastic) The government and own price elasticity If the government is seeking to raise revenue, they should tax goods that have an inelastic The government and own price elasticity A significant change in behavior means that the percent of reduction in quantity demand for the item is larger than the price change in price If they seek to significantly change behavior, they should tax goods that have an elastic demand...
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This note was uploaded on 04/09/2008 for the course ECON 101 taught by Professor Micro during the Spring '08 term at Siena College (Loudonville).

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Elasticity and total revenue - demand due to price...

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