Show Recommended textbook solutionsKrugman's Economics for AP2nd EditionDavid Anderson, Margaret Ray 1,042 solutions Principles of Economics8th EditionN. Gregory Mankiw 1,333 solutions Contemporary EconomicsWilliam A. McEachern 958 solutions Essentials of Investments7th EditionAlan J. Marcus, Alex Kane, Zvi Bodie 425 solutions When demand is price elastic an increase in price will increase total revenue?If quantity demanded changes by a larger percentage than price (i.e., if demand is price elastic), total revenue will change in the direction of the quantity change.
What happens if a price increase increases revenue?When you increase price, you increase revenue on units sold (The Price Effect). When you increase price, you sell fewer units (The Quantity Effect).
What happens to total revenue if price increases and the price increases and the price elasticity of demand is?The changes in total revenue are based on the price elasticity of demand, and there are general rules for them: Price and total revenue have a positive relationship when demand is inelastic (price elasticity < 1), which means that when price increases, total revenue will increase too.
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