What happened to the demand if prices and revenue move in opposite - ProProfs Discuss
Advertisement

What happened to the demand if prices and revenue move in opposite directions?



Asked by Jester, Last updated: Apr 20, 2024

+ Answer
Request
Question menu
Vote up Vote down

2 Answers

Claire_C

Claire_C

Claire_C
Claire_C

Answered Apr 25, 2017

Prices and revenue move in opposite directions does not necessarily mean that the demand is unit elastic. It will be unit elastic if the movement(changes) of 'price' and 'demand' are proportional. But here it is between prices and revenue( price x quantity). Suppose if it is prices increase while revenue decreases, it means that when price increases, the decrease in quantity is greater than the increase in price which only then could causes the revenue to decrease despite the increase in price. Similarly, if it is the case where the price decreases while revenue increases, if the changes in the price and quantity are proportional /equal, the revenue should remain constant. However, if the revenue is suggested to increase when price decreases in this case, the quantity increased should be greater than the decrease in price for the revenue to increase despite the reduce in price.
upvote downvote
Reply 

John Smith

John Smith

John Smith
John Smith

Answered Nov 26, 2016

Unit elastic
upvote downvote
Reply 

Advertisement
Advertisement
Search for Google images Google Image Icon
Select a recommended image
Upload from your computer Loader
Image Preview
Search for Google images Google Image Icon
Select a recommended image
Upload from your computer Loader
Image Preview
Search for Google images Google Image Icon
Select a recommended image
Upload from your computer Loader

Email Sent
We have sent an email to your address "" with instructions to reset your password.