Total Revenue and PED

Total Revenue and PED 10.11.20 Inelastic PED TR = P x Q Profit # revenue money coming in, but profit takes cost of production into account Revenue ↑ (business doing well) Profit ↓ (because money on other purchases or investment) when PED is <1, a fall in price leads to a fall in TR a rise in P leads to a rise in TR PED <1 P↑ → TR↑ if B company reduces price (from green to blue), and so they lose a lot more revenue (green) than they lost (blue) Elastic PED when PED is >1 P↓ → TR↑ P↑ → TR↓ A fall in price inc revenue Unit elasticity A 10% fall in price leads to a 10% increase in quantity demanded... TR is constant (no change)