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SingaporeEconomicsQuick questions
Elasticity and Its Applications
Quick questions on Elasticity and total revenue explained: H2 Economics
4short Q&A pairs drawn directly from our worked dot-point answer. For full context and worked exam questions, read the parent dot-point page.
What is revenue along a straight-line demand curve?Show answer
On a linear demand curve, demand is elastic at high prices and inelastic at low prices, with unit elasticity at the midpoint. So as you lower price from the top, revenue rises (elastic region), peaks at the midpoint (unit elastic), and then falls (inelastic region). Plotting total revenue against quantity gives an inverted-U shape peaking at the unit-elastic point.
What is q1?Show answer
State what happens to total revenue when the price of an inelastic good is raised. [2 marks]
What is q2?Show answer
Explain why total revenue is maximised at unit elasticity. [3 marks]
What is q3?Show answer
A firm with an elastic product wants more revenue. What should it do, and why? [2 marks]
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