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You need to be clear on which one is the effect and which one is the cause in the elasticity formula. Also this formula relates two percent changes of x and y and not proportions (which is a different concept). In this case, it seems that the income changes (and price remains constant), so we want to see the effect on the demand (quantity). Therefore Var%...


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Pick any point on the demand curve. If you were to increase price by $x$ percent, the quantity sold will decrease by $1.5x$ percent. If you increase price, what will happen to your total revenue? Will it go up or down? If you decrease price, what will happen to your total revenue? Move your point $x$ in the direction that will increase your TR. Do the same ...


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My understanding is that when demand is elastic, a price reduction will increase total revenue. Some readers may want to know that an elastic demand can either be unitary elastic ($E_d = −1$) or relatively elastic ($−∞ < E_d < −1$). When unitary elastic, the above statement is not true, strictly speaking. Can anyone reconcile this with the point ...


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Like anything derived from calculus, the statement is guaranteed to hold true only for infinitesimal change. Unfortunately, since I don't know the entire demand function, I can't say much more than this. A clear example of why this wouldn't work: starting at the same point \$100 and Q = 1000, we can decrease price to zero and total revenue would go down.


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No, it was moved to chat because Stack Exchange is getting tired of this nonsense and asked me to "please avoid extended discussions in comments". You're not cracking open a vault with the realization that existing carbon pricing is inadequate to impact behavior on the scale necessary to meaningfully drop emissions from transportation enough to move us to a ...


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