Question

If a mortician was aware of the relationship between elasticity of demand and total revenue, how might he or she take advantage of this information?

Answer 1

Answer : According to the relationship between elasticity of demand and total revenue,

I) If demand is elastic then decrease in price increase total revenue.

II) If demand is inelastic then increase in price increase total revenue.

Now if mortician know about this relationship between elasticity of demand and total revenue then mortician can increase total revenue by changing price level. If mortician find that the demand is elastic then mortician can decrease the price level to increase the total revenue. If mortician find that the demand is inelastic then mortician can increase the price level to increase the total revenue. Thus mortician can take advantage from the relationship between elasticity of demand and total revenue.