Answer:
Price falls and demand is inelastic.
Decrease as the amount demanded will be the same but the revenue fro mthis quantity will be lower.
Price rises and demand is inelastic.
Increase as the quantity demanded will be the same but at a higher price per unit.
Price rises and demand is elastic.
Decrease as the decrease in demand will negate the price increase
Price falls and demand is elastic
Increase as the decrease in prince will make the quantity increase in a higher proportion than the decrease in sales, therefore make a higher revenue
Price falls and demand is of unit-elasticity.
unchanged as the price and quantity effect cancel each other.
Explanation:
Being total Revenue: Price Sales x Quantity
and being Quantity a function of Sales price
we can derivate that Total revenue :
P + f(P)
And end with the following expression:
Q(1 - Ed) = total revenue efffect
when the demadn is inelastic (<1) this will be positive thus, they move in the same directins.
While, if elastic then (>1) making the otal revenue negative they move in opposite direction
Last if equal to one then, the increase is zero, ther eis no change
