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Explain how to use the total revenue test to determine the price-elasticity of demand range.

Explain how to use the total revenue test to determine the price-elasticity of demand range.

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In economics, the total revenue test used to determine the price-elasticity of demand of a good in a particular price range. In the test, the price is changed (increased or decreased) to check the effect of the price change on the total revenue. If increasing the price increases total revenue and decreasing the price decreases total revenue; then, the product is in the inelastic demand range. However, if increasing the price decreases total revenue and decreasing the price increases total revenue; then, the product is in the elastic demand range. Moreover, if there is no change in the revenue because of a change in the price, the product is in the unitary elastic range.

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