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When demand is perfectly elastic what happens to marginal revenue?
When Demand is perfectly elastic, Marginal Revenue is identical with price.
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.
When total revenue and price are inversely related demand is?
elastic
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.
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)
When demand is perfectly elastic what happens to marginal revenue?
When Demand is perfectly elastic, Marginal Revenue is identical with price.
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.
When total revenue and price are inversely related demand is?
elastic
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.
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)
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.
A price cut will increase the revenue a firm receives if the demand for its product is?
Either elastic or inelastic
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.
Show proof by way of computing when demand is elastic marginal revenue is positive but less than price?
When demand is elastic, the price elasticity of demand is greater than one (|E| > 1). In this scenario, a decrease in price leads to a proportionally larger increase in quantity demanded, resulting in an increase in total revenue. Marginal revenue (MR) can be calculated as the change in total revenue divided by the change in quantity; since total revenue increases with a price decrease, MR remains positive but is less than the price. Mathematically, if the price (P) is $10 and the quantity demanded increases significantly due to a price drop, MR would be positive but less than $10, confirming that demand is elastic.
What is the relation between PED and total revenue?
Price Elasticity of Demand (PED) measures how sensitive the quantity demanded of a good is to a change in its price. When demand is elastic (PED > 1), a decrease in price leads to a proportionally larger increase in quantity demanded, resulting in an increase in total revenue. Conversely, when demand is inelastic (PED < 1), a decrease in price results in a smaller increase in quantity demanded, leading to a decrease in total revenue. If demand is unitary elastic (PED = 1), total revenue remains unchanged when prices change.
In order for a price decrease to increase revenue which of the following must be true A. Demand must be elastic B. Demand must be inelastic. C. Demand must be unit elastic D. Supply must be inelastic?
A)
Demand for movie rentals is highly elastic what will happen if a video store is the price for a rental?
b lose revenue
