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WOLFRAM NOTEBOOK
Revenue and Elasticity
Revenue and Elasticity
Revenue is equal to price times quantity and is represented by the shaded rectangles. Elasticity measures the responsiveness of the quantity demanded to a change in price. The effect of a price change on revenue depends on the elasticity of demand, as can be seen through varying the slope of the demand curve. Consider an initial price and quantity of 1 and 1 for a revenue, shaded in light blue, of 1. Now vary the price to see a new revenue shaded in yellow: mouse over the yellow to see the amount.