Demand Elasticities Simplified II: Further Results and Details

Kenneth W. Clements (), Haiyan Liu, Marc Jim M. Mariano (), Eliyathamby A. Selvanathan (), Saroja Selvanathan () and George Verikios
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Kenneth W. Clements: University of Western Australia
Haiyan Liu: University of Western Australia
Marc Jim M. Mariano: Commonwealth Scientific and Industrial Research Organisation
Eliyathamby A. Selvanathan: Griffith University
Saroja Selvanathan: Griffith University

Chapter Chapter 3 in Short-cut Demand Elasticities and Other Convenient Approaches to Consumer Demand, 2025, pp 25-63 from Springer

Abstract: Abstract The rule of ½ states that the price elasticity of demand is equal to -½. This chapter elaborates the rule by providing the analytical foundations, pinpointing the precise conditions under which it holds. Also included is an assessment of the practical importance of the rule and some related results on feasible simplifications of demand elasticities. The income elasticity of the marginal utility of income is a key ingredient of the rule; estimates of this parameter are presented.

Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-981-96-3588-7_3

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DOI: 10.1007/978-981-96-3588-7_3

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