What is the relation between price elasticity of demand and marginal revenue.
2006-09-13 01:16:53 · 12 answers · asked by laily 1 in Social Science ➔ Economics
Well this might sound crazy, but here it goes.
Elasticity is the rate of response due to price change.
PEoD = % change in quantity demanded)/(% change in price)
..what happens when your change 1.00 coke to 1.50
Marginal revenue is the revenue a product will bring and is usually equal to the change in total revenue.
..what do you make when you change 1.00 coke to 1.50
Hope this helps, Good Luck
2006-09-13 01:29:50 · answer #1 · answered by vacera g 2 · 0⤊ 0⤋
As you know, the demand curve is negatively sloped. This means that the quantity demanded will increase as price goes down, and decrease as price goes up.
Revenue is, of course, quantity times price. If price goes up and quantity goes down, then it's possible for the total revenue to either increase or decrease.
Suppose the price of your commodity goes up.
If total revenue increases, then the marginal revenue is positive. This means the demand is inelastic: the quantity demanded isn't all that heavily affected by price.
If total revenue decreases, then the marginal revenue is negative. This means the demand is elastic: A small change in price leads to a large change in quantity demanded.
Hopefully that clears things up for you :-)
2006-09-13 01:34:55 · answer #2 · answered by Bramblyspam 7 · 0⤊ 0⤋
price elasticity of demand is directly proportional to the marginal revenue. because as the demand increaases the marginal revenue also increases.
2006-09-13 01:33:56 · answer #3 · answered by nakka h 1 · 0⤊ 0⤋
price elasticity of demand is directly proportion to marginal revenue.
explanation: when revenue is more price is more and revenue is marginal price of a commidity will be less.
i hope this will solve your question.
2006-09-13 01:18:56 · answer #4 · answered by Mr. Cool !!! 3 · 2⤊ 0⤋
Price of comodity increases with demond.
2006-09-13 18:48:37 · answer #5 · answered by narendra k 3 · 0⤊ 0⤋
Lord Almighty what a question
2006-09-18 22:43:04 · answer #6 · answered by SIm 2 · 0⤊ 0⤋
I think u r in s.y.j.c.
pls see the S.Y.J.C. Economics textbook and in that chp.Demand Elasticity.
U get the answer in full detail + diagrams also .....
Bye
All The Best........
2006-09-13 01:28:58 · answer #7 · answered by kt 3 · 0⤊ 0⤋
areeeeeeeeeeeeeeeeeeeeeeeeee
mail me later i will tell u
2006-09-13 01:35:52 · answer #8 · answered by Anonymous · 0⤊ 0⤋
i have obsolutely no idea sry
2006-09-13 01:18:44 · answer #9 · answered by Phoenix 4 · 0⤊ 0⤋
ive no idea
2006-09-13 01:18:10 · answer #10 · answered by jenzi_e 2 · 0⤊ 0⤋