Respuesta :
A price reduction raises total revenue if demand is elastic, and has no effect on total revenue if demand is unit elastic.
According to a constant relationship between the price elasticity of demand and total revenue, inelastic demand reduces total revenue. The elasticity does not change as the demand curve moves along.
Price elasticity is a term used by economists to describe how variations in price affect a product's supply and demand.
Supply, or the price elasticity of supply, exhibits elasticity similar to that of demand. The price elasticity of supply describes the link between a change in price and a change in supply. It is determined by subtracting the percentage change in price from the percentage change in quantity offered. The two elasticities work together to define what products are produced and at what costs.
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