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Vikas posted an Question
May 12, 2021 • 18:15 pm 30 points
  • UGC NET
  • Commerce

Which one of the following sets is incorrect to show the inter-relationships among price elasticity coefficient, change in price and change in total revenue ? 1

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  • Priya gulani best-answer

    Price and total revenue have a positive relationship when demand is inelastic (price elasticity < 1), which means that when price increases, total revenue will increase too. Price and total revenue have a negative relationship when demand is elastic (price elasticity > 1), which means that increases in price will lead to decreases in total revenue. Price changes will not affect total revenue when the demand is unit elastic (price elasticity = 1). Maximum total revenue is achieved where the elasticity of demand is 1. so option 2 is incorrect (answer)

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