Overview
Total revenue is a key concept in economics that represents the total income a business earns from selling its products. It is calculated by multiplying the price of goods by the quantity sold. Understanding total revenue helps businesses make informed decisions about pricing and sales strategies. D...
Key Terms
Example: If a company sells 100 units at $10 each, total revenue is $1,000.
Example: If a 10% price increase leads to a 20% drop in quantity demanded, demand is elastic.
Example: Luxury goods often have elastic demand.
Example: Necessities like medicine usually have inelastic demand.
Example: If price increases by 5% and quantity demanded decreases by 10%, elasticity is -2.
Example: A company may lower prices to increase sales volume.
Related Topics
Supply and Demand
The relationship between supply and demand determines market prices and quantities.
intermediateMarket Structures
Different market structures affect pricing and output decisions.
intermediateConsumer Behavior
Understanding how consumers make purchasing decisions is crucial for businesses.
intermediateKey Concepts
Total RevenuePrice ElasticityInelastic DemandElastic Demand