ped and total revrnue

• What is the equation for total revenue (TR)?

  P x Q
• If demand is price elastic, increasing the price will increase total revenue.

  False
• If demand is price inelastic and the price increases, total revenue will increase
• What happens to total revenue when price decreases for a good with price elastic demand?

  Increases
• Match the PED type with the appropriate action to increase total revenue:

  Price elastic ↔️ Reduce price

  Price inelastic ↔️ Raise price
• If demand is price inelastic, reducing the price will decrease total revenue.
• When demand is price elastic and the price is reduced, the quantity demanded increases significantly
• Steps to analyze the effect of price changes on total revenue using a diagram

  1️⃣ Identify the initial revenue (P1 x Q1)

  2️⃣ Identify the new revenue (P2 x Q2)

  3️⃣ Compare the revenue lost with the revenue gained

  4️⃣ Determine if total revenue increased or decreased
• On a diagram showing price elasticity, what does a shallow curve indicate?

  Price inelastic demand
• When demand is price inelastic, the revenue lost is less than the revenue gained
• Increasing the price of a good with price inelastic demand will always increase total revenue.
• What should a business do with price if demand is price elastic to increase total revenue?

  Reduce price
• When demand is price inelastic and price is reduced, total revenue decreases.
• If demand is price elastic and the price is raised, total revenue will decrease