Tuloelastisuus

Tuloelastisuus, also known as revenue elasticity, is a measure used in economics to quantify the responsiveness of total revenue to changes in the quantity sold of a good or service. It is calculated as the percentage change in total revenue divided by the percentage change in the quantity sold. A revenue elasticity of 1 indicates that a 1% increase in quantity sold results in a 1% increase in total revenue, which is typical for perfectly competitive markets. A revenue elasticity greater than 1 suggests that total revenue increases at a faster rate than the increase in quantity sold, often due to economies of scale or increasing marginal revenue. Conversely, a revenue elasticity less than 1 indicates that total revenue increases at a slower rate than the increase in quantity sold, which can occur in markets with decreasing marginal revenue. Understanding revenue elasticity is crucial for businesses to optimize pricing strategies and for policymakers to design effective economic policies.