ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -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-2: -If the price elasticity of demand is greater than 1, it is deemed elastic. That is, demand for the product is sensitive to an increase in price.

Detailed explanation-3: -when the elasticity is greater than one, indicating that a 1 percent increase in price will result in a more than 1 percent increase in quantity; this indicates a high responsiveness to price.

Detailed explanation-4: -An elastic demand is one in which the change in quantity demanded due to a change in price is large. An inelastic demand is one in which the change in quantity demanded due to a change in price is small. If the formula creates an absolute value greater than 1, the demand is elastic.

Detailed explanation-5: -When elasticity of demand is greater than 1, demand is elastic and seller’s revenue changes in the opposite direction. This is because as per total outlay method, total expenditure moves in the opposite direction as compared to price, since price and demand share an inverse relationship.