UGC NET COMMERCE January 2017(Paper-II) Q12
| Codes | Price elasticity coefficient | Change in price | Change in total revenue |
| 1 | Zero | Increase Decrease | Increase Decrease |
| 2 | Less than one | Increase Decrease | Decrease Increase |
| 3 | Equal to one | Increase Decrease | No change No change |
| 4 | More than one | Increase Decrease | Decrease Increase |
- Option : B
- Explanation : Relationship between price elasticity and total revenue
Total revenue from the sale of a good is equal to the price times the quantity. Price elasticity is an important concept because if demand is elastic an increase in sales price results in a decrease in total revenue for all producers. If demand is unitary total revenue remains the same if price changes, and total revenue increases if price is increased when demand is inelastic. These relationships are shown in the following table:
