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If demand is unitary elastic and the price rises what happens to total revenue?
Wiki User
∙ 13y ago
Total revenue decreases a little bit. So you could almost say that it stays the same.
Example:
The price of a Mars bar decreases by 10% and as a result of this demand extends by 10% (because we're talking here about unitary elasticity). So:
Ed = +10% / -10% = -1
Thus quantity demanded reacts in exactly the same way as the chane in price only in opposite direction.
Imagine this simple situation:
Selling price Mars bar: €1
Demand for Mars bar: 100
Total Revenue: p x q = 1 x 100 = €100
Change in price:
Selling price Mars bar (-10%): 90 cents
Demand MB (+10%): 110
Total revenue = 0.9 x 110 = €99
Change in TR: €1
Hope you understand it now!
Wiki User
∙ 13y ago
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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 will happen to total revenue if unitary elastic over a portion demand curve change upward by one percent?
What_will_happen_to_total_revenue_if_unitary_elastic_over_a_portion_demand_curve_change_upward_by_one_precent
What are unitary elastic products?
unitary elastic products are those with a supply and demand slope=1.
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.
What does the term unitary elastic describe?
Unitary elastic is a demand whose elasticity is exactly equal to 1.
When demand is perfectly elastic what happens to marginal revenue?
When Demand is perfectly elastic, Marginal Revenue is identical with price.
What will happen to total revenue if unitary elastic over a portion demand curve change upward by one percent?
What_will_happen_to_total_revenue_if_unitary_elastic_over_a_portion_demand_curve_change_upward_by_one_precent
What are unitary elastic products?
unitary elastic products are those with a supply and demand slope=1.
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.
What does the term unitary elastic describe?
Unitary elastic is a demand whose elasticity is exactly equal to 1.
When elasticity of demand for a good is exactly 1 how is demand described?
It means it is Unitary elastic.
What does unitary elastic demand means?
The term "Unitary elastic" is used when the price elasticity of demand is equal to 1. For example, change in price from 10 to11 (+10%) causes change in quantity from 10 to 9 (-10%). 10%/10%=1. Unitary Elastic for the Elasticity of Demand is a proportionate change in price and quantity. This means that the reaction of consumers to price changes is stable and not dramatic like elastic products, and not small or no changes in quantity like inelastic products. It's in the middle of these two. As price goes up or down for unitary products, the total revenue from it stays relatively the same.
What is unitary elasticity?
The term unitary elastic is used in economics and is also known as unitary elastic demand or unitary elasticity. It is a measure that is used to show the elasticity of the amount demanded of a product to a change in the price of the product.
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 a firm's marginal revenue is zero what can be said about the elasticity of demand for the output of the firm A. Demand is inelastic. B. Demand is elastic. C. Demand is unit elastic.?
Demand is unit elastic.
what elastic demand means?
The term "Unitary elastic" is used when the price elasticity of demand is equal to 1. For example, change in price from 10 to11 (+10%) causes change in quantity from 10 to 9 (-10%). 10%/10%=1. Unitary Elastic for the Elasticity of Demand is a proportionate change in price and quantity. This means that the reaction of consumers to price changes is stable and not dramatic like elastic products, and not small or no changes in quantity like inelastic products. It's in the middle of these two. As price goes up or down for unitary products, the total revenue from it stays relatively the same.
What does demand elastic mean?
The term "Unitary elastic" is used when the price elasticity of demand is equal to 1. For example, change in price from 10 to11 (+10%) causes change in quantity from 10 to 9 (-10%). 10%/10%=1. Unitary Elastic for the Elasticity of Demand is a proportionate change in price and quantity. This means that the reaction of consumers to price changes is stable and not dramatic like elastic products, and not small or no changes in quantity like inelastic products. It's in the middle of these two. As price goes up or down for unitary products, the total revenue from it stays relatively the same.
