ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -That implies that total revenue will move in the direction of the price change: an increase in price will increase total revenue, and a reduction in price will reduce it. Demand is unit price elastic, and total revenue remains unchanged. Quantity demanded falls by the same percentage by which price increases.

Detailed explanation-2: -If demand is elastic, then a price increase reduces the total revenue. When the price increases, then the demand falls by a considerable percentage. Then, total revenue starts moving in contradictory directions. Therefore, total income declines when the price of any commodity rises.

Detailed explanation-3: -When the demand for a product is elastic, a change in price results in a significant change in the quantity requested. As a result, when the price of the product falls, the quantity demanded increases that are large enough to compensate for the lower prices, and, as a result, the total revenue increases.

Detailed explanation-4: -In economics, the total revenue test is a means for determining whether demand is elastic or inelastic. If an increase in price causes an increase in total revenue, then demand can be said to be inelastic, since the increase in price does not have a large impact on quantity demanded.

Detailed explanation-5: -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.