Attributed to Libby Rittenberg and Timothy Tregarthen Saylor.org half of any linear demand curve, so total revenue moves in the direction of the quantity change.. Figure 5.3 Changes in T
Trang 1Attributed to Libby Rittenberg and Timothy Tregarthen Saylor.org
half of any linear demand curve, so total revenue moves in the direction of
the quantity change
Figure 5.3 Changes in Total Revenue and a Linear Demand Curve
Moving from point A to point B implies a reduction in price and an
increase in the quantity demanded Demand is elastic between these
two points Total revenue, shown by the areas of the rectangles drawn
from points A and B to the origin, rises When we move from point E to
point F, which is in the inelastic region of the demand curve, total
revenue falls
A movement from point E to point F also shows a reduction in price and an
increase in quantity demanded This time, however, we are in an inelastic
region of the demand curve Total revenue now moves in the direction of
the price change—it falls Notice that the rectangle drawn from point F is
smaller in area than the rectangle drawn from point E, once again
confirming our earlier calculation