Assume consumers are operating on the elastic portion of the demand curve and the firm meeting...

Assume consumers are operating on the elastic portion of the demand curve and the firm meeting this demand increases the price of the good. What can one conclude about the impact on the quantity demanded (%∆QDrelative to %∆P) and on the revenue the firm receives (or, equivalently, the consumers expend)?

Expert Solution

if the demand for the goods are elastic and the firm in the market increases the price of the goods in the market then the total revenue fo the firm in the market will fall because being in the elastic part the change in the quantity will be more than the change in the price, so if the price is increased the demand will fall by more than the change in the price and revenue will fall as a result.

Rahul Sunny answered 2 years ago

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