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Price Elasticity of Demand and the Total Revenue Test - HD

One way to determine whether demand for a good is elastic or inelastic between to prices is to measure the change in the total revenues of the sellers of that good following an increase or a decrease in the price. This is known as the "total revenue test of elasticity". If sellers' total revenues increase when the price decreases, then demand is elastic, but if total revenues fall when price declines, then demand is inelastic. This lesson explains why this is the case and walks you through an example how the total revenue test can be used to determine the elasticity of demand for ski lift tickets in Switzerland at a range of prices.
Length: 13:24

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