The Total Revenue curve derives is a downward parabola thanks to the fact that:
Elasticity of demand curves have different elasticities as you move along them.
Total Revenue is computed in a quadratic form.
Elasticity of demand curve has a constant elasticity at every point.
There is not rational answer to this problem.
The law of demand states:
Consumers will buy more of a product when its price declines.
Consumers will buy more of a product when its price increases.
Consumers are not sensitive to price changes in any scenario.
Consumers do not take into account prices when purchasing.
A value for elasticity is considered to be elastic if it:
Is less than one.
Is greater than 1.
Is equal to one.
Is equal to infinity.
A value for elasticity is considered to be inelastic if it:
Is more than one.
Equals infinity.
Equals one.
A value for elasticity is considered to be unit elastic if it:
A value for elasticity is considered to be perfectly elastic if it:
Is equal to 0.
A value for elasticity is considered to be perfectly inelastic if it:
The total revenue test indicates that:
If demand is elastic an increase in price will increase total revenue.
If demand is elastic an increase in price will decrease total revenue.
The Total Revenue Test indicates that:
If demand is inelastic an increase in price will increase total revenue.
If demand is inelastic an increase in price will decrease total revenue.
The greater the number of substitute goods:
the greater the price elasticity of demand.
the lower the price elasticity of demand.
