If we recall the meaning of revenue (or total expenditure) and own price elasticity of demand, the relationship becomes fairly obvious. This is shown to the right for elastic demand.

   It quickly becomes clear that, if demand is elastic, the % Quantity must be greater than the % Price; though, of course, in the opposite direction. In other words, the %Q is greater in absolute value than the %P when demand is elastic.

   Revenue is just P x Q, and a change in Price leads to a change in Quantity in the opposite direction (law of demand). Therefore, all we need to know is that demand is elastic, in order to know that an increase in price causes revenue to fall, and a decrease in price causes revenue to rise.

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