ECN 001A Lecture 8: Lecture 8

• School: UC-Davis
• Department: Economics
• Course: ECN 001A
• Professor: David Rapson

Document Summary

Elasticities of linear demand curve: elasticities decreases down the curve, since revenue = price * quantity demanded, revenue increases since the percentage change in price is more. If demand is inelastic, increasing price reduces a bit of quantity demanded than the percentage change in quantity demanded. If demand is inelastic, increasing price reduces a large quantity demanded: since revenue = price * quantity demanded, revenue decreases since the percentage change in price is less than the percentage change in quantity demanded.