Keep in mind, however, that revenue is not the same as profit. Profit = revenue - cost. Therefore, an increase in revenue will not necessarily increase profit, only if revenue rises faster than cost.

   Nevertheless, we have some very useful information about what happens to revenue when a firm changes its price, if demand is elastic. What if demand is inelastic? Consider the expression to the left.

   From this simple expression, we see that if demand is inelastic the change in price will always be greater than the change in quantity demanded, in absolute value. This means that the change in the price will determine what happens to revenue for inelastic demand.

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