Elasticity and revenue: do we need a reappraisal?

2002

The relationship between price-elasticity of demand, price variations and total revenue changes might be considered as one of the most widely accepted results arising from consumer theory. Recently, however, this relationship has been put under suspicion on the basis of a misinterpretation of what economists have in mind when writing about it. In this paper we try to clarify concepts incorporating new elements into discussion with the aim of reaffirming the validity of this relationship.