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When is demand inelastic?
When a reduction in price results in a decrease in total revenue.
How does a change in price on a linear demand curve affect total revenue?
on the linear demand curve, demand is elastic at price above the point of unitary elasticity so a price increase will decrease the total revenue.
Assume that the price of elasticity demand is -2 for a certain firm's product If the firm raises price the firm's manager can expect total revenue to?
decrease
What is The Total Revenue Rule?
if a price cut decreases total revenue, demand is elastic. if a price cut decreases total revenue, demand is inelastic. if a price cut leaves total revenue unchanged, demand is unit elastic.
How does the total revenue test indicate demand elasticity?
For any given change in the price(rise or fall), where demand is elastic there is a more than proportionate change in quantity demanded. When the price elasticity of demand for a good is elastic (|Ed| > 1), the percentage change in quantity demanded is greater than that in price. Hence, when the price is raised, the total revenue of producers falls, and vice versa.
When is demand inelastic?
When a reduction in price results in a decrease in total revenue.
How does a change in price on a linear demand curve affect total revenue?
on the linear demand curve, demand is elastic at price above the point of unitary elasticity so a price increase will decrease the total revenue.
Assume that the price of elasticity demand is -2 for a certain firm's product If the firm raises price the firm's manager can expect total revenue to?
decrease
What is The Total Revenue Rule?
if a price cut decreases total revenue, demand is elastic. if a price cut decreases total revenue, demand is inelastic. if a price cut leaves total revenue unchanged, demand is unit elastic.
How do you calculate total revenue?
To calculate total revenue you simply multiply the quantity by the price. Total revenue includes expenses; therefore, total revenue isn't the same as profit.
How does the total revenue test indicate demand elasticity?
For any given change in the price(rise or fall), where demand is elastic there is a more than proportionate change in quantity demanded. When the price elasticity of demand for a good is elastic (|Ed| > 1), the percentage change in quantity demanded is greater than that in price. Hence, when the price is raised, the total revenue of producers falls, and vice versa.
How do you get the total revenue?
Total sales - Cost of goods sold = Revenue
How does a monopolistically competitive firm determine its profit-maximizing price?
price = marginal revenue. marginal revenue > average revenue. price > marginal cost. total revenue > marginal co
What questions is the price elasticity of demand designed to answer?
Price elasticity of demand is used to determine how changes in price will effect total revenue. If demand is elastic(>1) a change in price will result in the opposite change in total revenue.(+P=-TR) When demand is unit elastic(=1) a change in price wont change total revenue. If demand is inelastic a change in price will result in a change in total revenue in the same direction.(+P=+TR)
What is the formula for Total Revenue and Total Cost?
Total revenue equals the sale price of products multiplued by the total amount of units sold
How do you calculate Total revenue variance?
total revenue variance = actual revenue - standard revenue Total revenue variance (AQ x AP) - (SQ x SP) where AQ is actual quantity (units of service sold), AP is actual price (actually recorded as revenue), SQ is standard quantity, and SP is standard price
When the price of a good will cause total revenue to fall if price elasticity of demand is elastic or inelastic?
when price changes it is called inelastic demand and when quantity of demand change that is called elastic of demand.
