Revenue
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14 Terms
What is the formula for profit?
Profit = Total revenue- total cost
What is the total revenue formula?
price x quantity
What happens to revenue when prices increase? (PED>1)
Total revenue decreases. Prices may go up but this leads to a decrease in QD by a larger proportion.
What happens to revenue when prices decrease? (PED>1)
Total revenue increases. Prices go down by a small percentage, however QD increases by a greater proportion. Gain many more consumers
What happens to total revenue when prices increase? (PED<1)
Total revenue increases. Prices increase, QD only falls by a smaller proportion. Only a few customers are lost
What happens to total revenue when prices decrease? (PED<1)
Total revenue decreases, very few consumers are gained
What happens to total revenue when prices increase? (PED=1)
Total revenue does not change
What happens to total revenue when prices decrease? (PED=1)
Total revenue does not change
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