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If the price elasticity of demand is 2 and a firm lowers its price by 12 percent, the total revenue will 

          If the price elasticity of demand is 2 and a firm lowers its price by 12 percent, the total revenue will

Added by David M.

Principles of Economics
Principles of Economics
Gregory Mankiw 8th Edition
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If the price elasticity of demand is 2 and a firm lowers its price by 12 percent, the total revenue will
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00:02 So here in this question, the price elasticity of demand of 1 .2 means that the quality demand will increase by 1 .2 % for every 1 % decrease in the price and therefore 10 % decrease 10 % decrease will result in will result in 12 % increase 12 % increase in quantity demanded in quantity demanded quantity demanded this will increase the total revenue by about 2 % so the total revenue total revenue will be increased will be increased by 2%...
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