Total Revenue And Elasticity


Total revenue (TR) = Price x Quantity (P x Q)

Elastic demand means when price of any product increases, its demand decreases more than the increase in price. As price increases total revenue decreases in case of elastic demand. Inelastic demand of any product means that if price of that product increases there is very small effect on its quantity demanded. As price increases, total revenue also increases in case of inelastic demand.

For example, flour is the basic necessity of life for all people. Its demand is inelastic. As the price of flour increases, its quantity demanded does not decrease much because people have to use flour in all situations whether its price is high or low. Virtual University

Total Revenue And Elasticity


Please enter your comment!
Please enter your name here