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Principles of Microeconomics

7th Edition
N. Gregory Mankiw
ISBN: 9781305156050

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BuyFindarrow_forward

Principles of Microeconomics

7th Edition
N. Gregory Mankiw
ISBN: 9781305156050
Textbook Problem

Define the price elasticity of demand.Explain the relationship between total revenue and the price elasticity of demand.

To determine
The price elasticity of demand and its relation with total revenue.

Explanation

Price elasticity of demand is computed as the percentage change in quantity demanded divided by the percentage change in price, and measures how much the quantity demanded responds to the changes in the price.

When the price elasticity less than 1, that is, when demand is inelastic, a rise in the pri...

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