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Chapter 4

Published on Nov 18, 2015

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PRESENTATION OUTLINE

Elasticity and Revenue: elasticity helps us measure how consumers respond to price change different product. The elasticity of demand determines how a change in prices will affect a firm's total revenue or incomestible

Computing a Firm's Total Revenue: The amount of money the company receives by selling its goods. If a pizzeria sells 125 slice of pizza per day at $2.00 per slice ,total revenue would be $250per day

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Total Revenue and Elastic Demand: The law of demand tells us that an increase in price will decrease the quantity demanded.

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Total Revenue and Inelastic Demand: If demand is inelastic, consumers' demand is not very responsive to price changes. If the firm raises its price by 25 percent ,the quantity demanded will fal, but by less than 25 percent.

Elasticity and Pricing Policies: A firm needs to know whether the demand for its product is elastic or inelastic at a given price. The firm make pricing decisions that lead to the greatest revenue.

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