2.6 Total Revenue Test

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10 Terms

1
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Total Revenue

total value of sales of a good or service. TR = price x quantity

2
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Price Effect

when price increases, each unit sells for a higher price, which positively affects total revenue

3
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quantity effect

when price increases, fewer units are sold (law of demand), which negatively affects total revenue

4
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if demand is elastic..

the quantity effect will be stronger than the price effect

5
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if demand is inelastic..

the price effect will be stronger than the quantity effect

6
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if demand is unit-elastic..

the price effect will be equal to the quantity effect

7
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price increases, elastic

TR decreases

8
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price decreases, elastic

TR increases

9
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price increases, inelastic

TR increases

10
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price decreases, inelastic

TR decreases