We now proceed to establish a relationship between dernand for a product afi3 the revenue generated by that product.
Now, we can say,
(a) If I e I = -1, MR = 0 and TR = constant, and P & Q change.
(b) If I e I > -1, M R > 0 and as P falls bolh TR and Q increase and vice-versa
(c) If I e I < - 1 , MR < 0 and as T R decreases Q increases and vice-versa.
Relationship between Price Elasticity of Demand and Total Revenue
Now, we can say,
(a) If I e I = -1, MR = 0 and TR = constant, and P & Q change.
(b) If I e I > -1, M R > 0 and as P falls bolh TR and Q increase and vice-versa
(c) If I e I < - 1 , MR < 0 and as T R decreases Q increases and vice-versa.
Relationship between Price Elasticity of Demand and Total Revenue
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