Explain about the elasticity and total revenueelasticity, Ask an Expert

Economics

Explain about the elasticity and total revenue.

Elasticity and Total Revenue:

a. When demand for a good is elastic, a raise in price decreases total revenue. Then Sales effect > Price effect there.

b. When demand for a good is inelastic, a higher price raises total revenue. Then Price effect > Sales effect

c. When demand for a good is unit-elastic, an increase into price does not change whole revenue. Then Sales effect = Price effect.

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Macroeconomics, Economics

Category:- Macroeconomics
Reference No.:- M9581636

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