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Topic Videos

Price Elasticity and Total Revenue

Level:
A-Level, IB Diploma
Board:
AQA, Edexcel, Eduqas, IB, OCR, WJEC

Last updated 16 Feb 2019

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This short revision video explores the important link between the coefficient of price elasticity of demand and total revenue for a supplier

Key summary

Impact on total revenue for a good with an inelastic demand if the price rises

  • If Ped <1, then a rise in price leads to an increase in total revenue

Impact on total revenue for a good with an elastic demand if the price rises

  • If Ped > 1, then a rise in prices leads to a decrease in total revenue

Impact on total revenue for a good with unitary elastic demand if the price rises

  • If demand has unitary elasticity, then a change in price leaves total revenue unchanged
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