ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -If demand is elastic at a given price level, then should a company cut its price, the percentage drop in price will result in an even larger percentage increase in the quantity sold-thus raising total revenue.

Detailed explanation-2: -In the elastic region, the percentage change in quantity demanded is greater than the percentage change in price, so raising the price in this region of the demand curve will decrease total revenue while lowering the price increases total revenue.

Detailed explanation-3: -When a product is elastic and its price rises, total revenue decreases. When a product is inelastic and its price rises, total revenue increases. When a product is inelastic and its price falls, total revenue decreases. When a product is unit elastic and its price changes, total revenue remains constant.

Detailed explanation-4: -If demand for a product is price elastic and the price increases, total revenue will decrease. If demand for a product is price inelastic and the price decreases, total revenue will decrease.

Detailed explanation-5: -If the price for an inelastic good is lowered, the demand for that good does not increase, resulting in less overall revenue due to the lower price and no change in demand. This would indicate that the firm should not reduce the price of its goods as there is no beneficial outcome in doing so.