Lecture 6 - Effect on Revenue, Cross Elasticity, Elasticity of Supply Flashcards
1
Q
Elasticity of Demand and Total Revenue
Total Revenue: TR = _____ X ________
A
Total Revenue: TR = PRICE X QUANTITY
2
Q
Why does sellers need to know how elastic their goods are?
A
So they can plan
3
Q
When demand is INELASTIC.
_____ effect dominates the ________ effect.
In this instance, TR will ____ when the price rises. (Vice Versa)
A
PRICE effect dominates the QUANTITY effect.
In this instance, TR will RISE when the price rises. (Vice Versa)
