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A NEW APPROACH TO THE PRICE ELASTICITY OF DEMAND

Andrés Vázquez
Giornale degli Economisti e Annali di Economia
Nuova Serie, Anno 52, No. 1/3 (Gennaio-Marzo 1993), pp. 125-132
Published by: EGEA SpA
Stable URL: http://www.jstor.org/stable/23247213
Page Count: 8
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Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.
A NEW APPROACH TO THE PRICE ELASTICITY OF DEMAND
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Abstract

The concept of elasticity of demand is defined, according to its own genesis, as the quotient of the quantity and price partial effects on total revenue. A remarkable feature of this alternative representation is that the analysis keeps exact formal analogy whether changes are finite or infinitesimal. Further, a theorem ensures that arc elasticity equals point elasticity at some point inside the arc demand interval, thus leading to the exact estimation of the constant elasticity demand functions. If the demand curve is linear, then it reduces to Allen's familiar formula.

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