Changes

Price elasticity of demand is important because it tells us whether the owner's

Price elasticity of demand is important because it tells us whether the owner's

overall revenue goes up or down due to a price change.  Revenue is price times quantity, and when price goes up then quantity goes down, and we need to know the price elasticity to know what happens to the overall '''P x Q''' (price times quantity).

overall revenue goes up or down due to a price change.  Revenue is price times quantity, and when price goes up then quantity goes down, and we need to know the price elasticity to know what happens to the overall '''P x Q''' (price times quantity, which is the revenue).

Mathematically, price elasticity is as follows:

Mathematically, price elasticity is as follows: