0
What happens to total revenue when prices fall and demand is price inelastic?
Wiki User
∙ 13y ago
Inelastic demand means that the demand changes very little as the price rises or falls. If prices drop and people don't buy any more of the item, total revenue declines.
Wiki User
∙ 13y ago
Add your answer:
Earn +20 pts
If the prices have a little effect on the quantity of a product demanded the product is said to have?
inelastic demand
What is the importance of elasticity of demand and supply?
Elasticity of demand to firms are important because they represent the nature of the goods they are dealing in. For example if a firm produces goods with inelastic demand they will be able to earn high profits because even if they increase the price of the goods, since the change in demand will be less than the change in price. Also if there is a tax they will share less of the burden. This means they can keep prices high and not have to worry about a lot of things. However, if a firm were to produce goods with elastic demand, then they will have to make sure the price of the good remains low and if there is a tax they will be the ones who share the majority of the burden.
Why are the unique products price inelastic?
inelastic is supply and demand trends. inelastic means the demand only slightly or never really changes. things like luxury items, sports cars, mansions, penthouse apartments, high class call girls, all of them stay at steady prices because the demand for them never changes.
What is a perfect inelastic demand?
When demand for a product or service does not change at all in response to changes in its price. Of course in the real world that rarely if ever happens; it's an extreme case used to illustrate one endpoint of the spectrum of supply-and-demand responses by consumers.
What happens to prices when demand is greater than suply?
They rise. Supply & demand.
If the prices have a little effect on the quantity of a product demanded the product is said to have?
inelastic demand
What is the importance of elasticity of demand and supply?
Elasticity of demand to firms are important because they represent the nature of the goods they are dealing in. For example if a firm produces goods with inelastic demand they will be able to earn high profits because even if they increase the price of the goods, since the change in demand will be less than the change in price. Also if there is a tax they will share less of the burden. This means they can keep prices high and not have to worry about a lot of things. However, if a firm were to produce goods with elastic demand, then they will have to make sure the price of the good remains low and if there is a tax they will be the ones who share the majority of the burden.
Why are the unique products price inelastic?
inelastic is supply and demand trends. inelastic means the demand only slightly or never really changes. things like luxury items, sports cars, mansions, penthouse apartments, high class call girls, all of them stay at steady prices because the demand for them never changes.
What is perfect inelastic demand?
In economic theory, a perfect inelastic demand is a demand for some product that cannot be reduced, either by higher prices or shortages, because it is something that people absolutely have to have at any cost. There would be very few examples of a perfect inelastic demand. Some people need a certain kind of medicine to treat their disease, such as a severe diabetic who needs insulin; this is a perfectly inelastic demand. A heroin addict must have his or her heroin, regardless of cost, so that too is a perfectly inelastic demand. But most products have some elasticity of demand. If you cannot afford fruit juice, you can probably drink water instead.
What is a perfect inelastic demand?
When demand for a product or service does not change at all in response to changes in its price. Of course in the real world that rarely if ever happens; it's an extreme case used to illustrate one endpoint of the spectrum of supply-and-demand responses by consumers.
The difference between a elastic and inelastic demand?
Elastic demand changes according to some other factor. The demand for holdiay trees is elastic throughout the year because there is only damand during the winter season. Inelastic demand is constant. As you might have guessed, the demand for gasoline is inelastic because most families need a constant supply. Even during the so-called summer driving season, the uptick in demand is going to remain the same, unless prices cause what is called "demand destruction." This is what happened during 2009.
What happens to prices when demand is greater than suply?
They rise. Supply & demand.
Is rice production consider as Inelastic demand or elastic demand?
Production itself cannot have inelastic demand, only supply. I will look at both cases. The demand for rice as a good is very inelastic. This is because people will buy rice no matter the price, because in many places of the world, it is their main source of food. Recently rice as skyrocketed in price (resulting in riots in places), but people still buy it. This is mainly out of necessity, but alternatives are emerging. The elasticity of supply is also inelastic, as we are looking at a huge rise in prices, but a very small change in production.
What happens to price as demand decreases?
Prices normally increase as demand increases and decrease as demand decreases.
What will happen if there is an increase in demand for a product who's supply is perfectly elastic?
The quantity of the the products bought tends to fluxuate a lot. The prices tend to stay somewhat stable. It is opposite for inelastic demand,
What usually happens to prices when there is a demand for a product?
The price is raised.
Are elastic or inelastic goods are still in demand even if even if prices rise?
Inelastic goods, such as gas or energy based products will always be in demand. This is owing to the fact that everyone utilizes the generally inexpensive goods. Elastic goods, on the other hand, are considered a luxury item/s, such as a Corvette or designer clothing.
