Question

How is total revenue increased when demand is elastic? If an increase in price causes an...

How is total revenue increased when demand is elastic?

If an increase in price causes an increase in total revenue, demand is said to be inelastic and if an increase in price causes a decrease in total revenue, then demand is said to be elastic… There’s no way for total revenue to increase when demand is elastic, right?

Homework Answers

Answer #1

There is actually.

An elastic demand means simply that if the price increase the demand will respond in a greater change. So, if the price decrease the demand will increase more and that will increase total revenue because total revenue is just price x quantity here the increase in the quantity is more than the decrease in price so total revenue will be higher.

Just opposite will happen if the price rise for a elastic good. If the price increase the demand will decrease, the increase in price will be lower than the change in demand that will decrease the revenue.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Fill in the blanks: When demand is inelastic, a decrease in price causes quantity demanded to...
Fill in the blanks: When demand is inelastic, a decrease in price causes quantity demanded to ________and total revenue to ________. If price rises and total revenue rises, demand must be ________. When demand is elastic, an increase in price causes quantity demanded to ________and total revenue to ________. If price rises and total revenue stays the same, demand must be ________ elastic.
The demand for a good is elastic if _____ Select one: a. an increase in price...
The demand for a good is elastic if _____ Select one: a. an increase in price leads to an increase in total revenue. b. a decrease in price causes no changes in total revenue. c. an increase in price leads to a decrease in total revenue. d. a decrease in price leads to a decrease in total revenue. e. an increase in price causes no change in total revenue.
When the demand for a product is price elastic, a rise in its price causes total...
When the demand for a product is price elastic, a rise in its price causes total revenue to: Select one: a. fall because quantity sold remains the same and thus total revenue falls. b. fall because the higher price per product is not enough to offset the decrease in revenue from the fall in quantity sold. c. rise because the higher price per product will more than offset the fall in revenue due to the decrease in quantity sold. d....
1. when decreasing the price of diapers from $10 to $8 dollars total revenue Increases. demand...
1. when decreasing the price of diapers from $10 to $8 dollars total revenue Increases. demand price is inelastic, unit elastic or elastic? 2. when decreasing the price of diapers from $4 to $3 total revenue Decrease demand price is unit elastic, inelastic, or elastic? 3. The business would want to know the profit maximizing price at this price, demand price is inelastic, unit elastic or elastic?
when demand is inelastic, an increase in price will lead to an increase in total revenue...
when demand is inelastic, an increase in price will lead to an increase in total revenue for the product. -True -Flase
With elastic demand a change in price causes a(n) _____________ change in total revenue. a. opposite...
With elastic demand a change in price causes a(n) _____________ change in total revenue. a. opposite b. identical c. unparallel d. parallel
When demand is own price-inelastic, a price decrease  ______________________ total revenue.
When demand is own price-inelastic, a price decrease  ______________________ total revenue.
For inelastic demand curves, total revenue move is the __________ direction as the price; for elastic...
For inelastic demand curves, total revenue move is the __________ direction as the price; for elastic demand curves, total revenue moves in the __________ direction as the price. A. Opposite; same. B. Same; opposite. C. Same; same. D. Opposite; opposite.
CLASS: Elastic or Inelastic? A price change causes the quantity demanded of a good to drop...
CLASS: Elastic or Inelastic? A price change causes the quantity demanded of a good to drop by 20 percent, yet total revenue still increases by 10 percent. Is demand elastic or inelastic? How can you tell?
Define what happens to revenue and why, when there is a price increase in a product...
Define what happens to revenue and why, when there is a price increase in a product that has a price elasticity of demand that is elastic, inelastic, and unity elastic. In your answer be sure to also explain what makes price elasticity of demand elastic, inelastic, and unit elastic.