anonymous
  • anonymous
I am watching the lecture 3 elasticity. At13:29 the professor is talking about the relationship between Elasticity and Revenue; he says " If the elasticity is between 0 and minus 1, then raising prices will raise revenues. If the elasticity is greater than minus 1, then raising prices will lower revenues." But he didn't prove that? Who can help me to explain why? Tks a lot!
OCW Scholar - Principles of Microeconomics
chestercat
  • chestercat
See more answers at brainly.com
At vero eos et accusamus et iusto odio dignissimos ducimus qui blanditiis praesentium voluptatum deleniti atque corrupti quos dolores et quas molestias excepturi sint occaecati cupiditate non provident, similique sunt in culpa qui officia deserunt mollitia animi, id est laborum et dolorum fuga. Et harum quidem rerum facilis est et expedita distinctio. Nam libero tempore, cum soluta nobis est eligendi optio cumque nihil impedit quo minus id quod maxime placeat facere possimus, omnis voluptas assumenda est, omnis dolor repellendus. Itaque earum rerum hic tenetur a sapiente delectus, ut aut reiciendis voluptatibus maiores alias consequatur aut perferendis doloribus asperiores repellat.

Get this expert

answer on brainly

SEE EXPERT ANSWER

Get your free account and access expert answers to this
and thousands of other questions

anonymous
  • anonymous
Hi, Well, first of all I think he meant: If the elasticity is greater than minus 1 - in absolute value - then raising prices will lower revenues. (btw he corrects himself later in the class). The equation is Delta R / Delta P = Q (1+E) So Delta R / Delta P is positive when 1+E>0 -> 0>E>-1 -> in this case raising prices will increase revenues And Delta R / Delta P is negative when 1+E<0 -> E<-1 ->in this case raising prices will decrease revenues I hope this makes sense.
anonymous
  • anonymous
Thank you very much!

Looking for something else?

Not the answer you are looking for? Search for more explanations.