Results 1 to 2 of 2

Thread: price elasticity of demand of -0.5

  1. September 4th 2007, 07:00 PM #1
    jhayes
    jhayes is offline
    Newbie
    Joined
    Aug 2007
    From
    San Antonio, TX
    Posts
    2

    price elasticity of demand of -0.5

    If the price elasticity of a product is -0.5, is it a good idea to cut the price?
    Follow Math Help Forum on Facebook and Google+
  2. September 4th 2007, 07:48 PM #2
    JakeD
    JakeD is offline
    Senior Member
    Joined
    Apr 2006
    Posts
    399
    Awards
    1
    MHF Karma
    Quote Originally Posted by jhayes View Post
    If the price elasticity of a product is -0.5, is it a good idea to cut the price?
    Look at the effect on revenue PX.

    \frac{d(PX)}{dP} = \frac{dP}{dP}X + P\frac{dX}{dP} = X(1 + \frac{PdX}{XdP}) = X(1 -.5) = .5X > 0.

    So revenue moves in the same direction as price. Cut price, cut revenue. Doesn't sound good like a good idea.
    Follow Math Help Forum on Facebook and Google+
« lebesgue measurable sets | word problem indifference curve »

Similar Math Help Forum Discussions

  1. elasticity of demand
    Posted in the Calculus Forum
    Replies: 7
    Last Post: November 9th 2010, 05:19 PM
  2. price elasticity of demand
    Posted in the Business Math Forum
    Replies: 9
    Last Post: July 22nd 2010, 01:45 AM
  3. Price Elasticity of Demand
    Posted in the Calculus Forum
    Replies: 1
    Last Post: December 20th 2009, 08:06 AM
  4. Economics Price Elasticity of demand help
    Posted in the Business Math Forum
    Replies: 3
    Last Post: December 10th 2009, 05:22 AM
  5. price elasticity of demand
    Posted in the Business Math Forum
    Replies: 1
    Last Post: January 28th 2007, 08:53 PM

Search Tags


/mathhelpforum @mathhelpforum