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  2. Price elasticity of demand - Wikipedia

    en.wikipedia.org/wiki/Price_elasticity_of_demand

    When the price elasticity of demand for a good is perfectly inelastic (E d = 0), changes in the price do not affect the quantity demanded for the good; raising prices will always cause total revenue to increase. Goods necessary to survival can be classified here; a rational person will be willing to pay anything for a good if the alternative is ...

  3. Price elasticity of supply - Wikipedia

    en.wikipedia.org/wiki/Price_elasticity_of_supply

    Relatively inelastic supply: This is when the E s formula gives a result between zero and one, meaning that when there is a change in price, the percentage change in supply is lower than the percentage change in price. For example, if a product costs $1 and then increases to $1.10 the increase in price is 10% and therefore the change in supply ...

  4. Total revenue test - Wikipedia

    en.wikipedia.org/wiki/Total_revenue_test

    Total revenue, the product price times the quantity of the product demanded, can be represented at an initial point by a rectangle with corners at the following four points on the demand graph: price (P 1), quantity demanded (Q 1), point A on the demand curve, and the origin (the intersection of the price axis and the quantity axis).

  5. Demand - Wikipedia

    en.wikipedia.org/wiki/Demand

    Perfectly inelastic demand is represented by a vertical demand curve. Under perfect price inelasticity of demand, the price has no effect on the quantity demanded. The demand for the good remains the same regardless of how low or high the price. Goods with (nearly) perfectly inelastic demand are typically goods with no substitutes.

  6. Elasticity (economics) - Wikipedia

    en.wikipedia.org/wiki/Elasticity_(economics)

    If price elasticity of demand is calculated to be less than 1, the good is said to be inelastic. An inelastic good will respond less than proportionally to a change in price; for example, a price increase of 40% that results in a decrease in demand of 10%. Goods that are inelastic often have at least one of the following characteristics:

  7. Markup rule - Wikipedia

    en.wikipedia.org/wiki/Markup_rule

    On the other hand, a competitive firm by definition faces a perfectly elastic demand; hence it has = which means that it sets the quantity such that marginal cost equals the price. The rule also implies that, absent menu costs , a firm with market power will never choose a point on the inelastic portion of its demand curve (where ϵ ≥ − 1 ...

  8. Total revenue - Wikipedia

    en.wikipedia.org/wiki/Total_revenue

    Price and total revenue have a positive relationship when demand is inelastic (price elasticity < 1), which means that when price increases, total revenue will increase too. Price and total revenue have a negative relationship when demand is elastic (price elasticity > 1), which means that increases in price will lead to decreases in total revenue.

  9. Tax wedge - Wikipedia

    en.wikipedia.org/wiki/Tax_wedge

    Graph of a tax wedge, showing consumer and producer incidence. The tax wedge is the deviation from the equilibrium price and quantity (and , respectively) as a result of the taxation of a good.