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A NEW APPROACH TO THE PRICE ELASTICITY OF DEMAND
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
You can always find the topics here!Topics: Elasticity of demand, Total revenue, Price elasticity of demand, Price elasticity, Revenue, Demand curves, Prices, Market prices, Average revenue, Unitary elasticity
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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.
Giornale degli Economisti e Annali di Economia © 1993 EGEA SpA