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What happens to total revenue when price increases and demand is elastic?
Since the percentage change in quantity demanded is greater than the percentage change in price, raising the price of an elastic good will decrease total revenue while lowering the price of an elastic good increases total revenue.
What happens to total revenue when price decreases and demand is elastic?
b) If demand is price elastic, then decreasing price will increase revenue.
When price increases and total revenue increases or when price decreases and total revenue decreases the value of price elasticity is?
A decrease in price result in an increase in total revenue(total expenditure), indicates inverse relation so demand will be elastic(E>1) as per total outlay method and also E>1 will be happened under % method when %ΔQ>%ΔP.
What happens to total revenue when price decreases?
If elastic: The quantity effect outweighs the price effect, meaning if we decrease prices, the revenue gained from the more units sold will outweigh the revenue lost from the decrease in price.