Price elasticity

Can a price increase shrink revenue?

Elasticity compares the percentage change in demand with the percentage change in price.

Midpoint elasticity = (ΔQ / average Q) ÷ (ΔP / average P)

ΔQ and ΔP are signed changes in quantity and price. Divide each change by its two-point average. (−20 ÷ 90) ÷ (₹10 ÷ ₹105) ≈ −2.33. The units cancel.

At ₹100 you sell 100 tickets. At ₹110 you sell 80. The midpoint elasticity is about −2.33.

ΔQ and ΔP are signed changes in quantity and price. Divide each change by its two-point average. (−20 ÷ 90) ÷ (₹10 ÷ ₹105) ≈ −2.33. The units cancel.

In the worked example, what happens to total revenue?