Understanding the Relationship Between Price Elasticity of Demand and Total Revenue

💡 The video discusses the relationship between total revenue and price elasticity of demand.

📈 Total revenue is calculated by multiplying the price and quantity, represented graphically as a rectangle.

🔄 The video examines how total revenue changes along the demand curve for both elastic and inelastic goods.

💡 Elasticity of demand determines the responsiveness of quantity demanded to price changes.

💰 When the price of a good decreases, the total revenue increases if the demand is inelastic.

📈 Even with a significant decrease in price, the demand for a good may only increase by a small amount.

💰 When the price increases, total income also increases, indicating inelastic demand.

⬇️ As the price increases, the quantity demanded decreases, leading to a loss in sales.

📈 Despite the decrease in quantity demanded, the total income increases due to the higher price.

💰 Higher prices lead to a decrease in total revenue.

🔁 Inelastic demand occurs when the percentage change in quantity is less than the percentage change in price.

📈📉 Elastic demand results in a decrease in total revenue when the price is lowered.

📊 The relationship between price elasticity of demand and total revenue is explained.

⬆️⬇️ As the price increases, total revenue decreases due to a decrease in demand.

⬇️⬆️ As the price decreases, total revenue increases due to an increase in demand.

📈 An increase in price leads to a decrease in total revenue.

📉 A decrease in price leads to an increase in total revenue for elastic demand.

💰 Elastic demand results in selling more units at a lower price, leading to higher total income.

📈 Increasing the price leads to a decrease in total revenue.

📉 Decreasing the price leads to an increase in total revenue.

➡️ Total revenue remains constant when demand is unitary.