R1015
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why the price elasticity of demand =1, total revenue will be maximum? or when the total revenue can be maximum?
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sararah04
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You can draw PED and revenue graphs to show this. When PED is greater than 1, revenue will increase, and when PED is smaller than 1, revenue will fall. So the maximum point of the revenue graph will match when PED is 1. You can search up PED and revenue diagrams on the internet to help you understand the relationship. The diagram I'm talking about is the one that has a PED graph on the upper half of the page and a revenue (reverse U shape) diagram on the bottom half.

I remember having a hard time understanding this, but you can think of this as just showing the relationship between PED and revenue — when PED increases, what will happen to revenue, and vice versa. Hope this helps!
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R1015
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(Original post by sararah04)
You can draw PED and revenue graphs to show this. When PED is greater than 1, revenue will increase, and when PED is smaller than 1, revenue will fall. So the maximum point of the revenue graph will match when PED is 1. You can search up PED and revenue diagrams on the internet to help you understand the relationship. The diagram I'm talking about is the one that has a PED graph on the upper half of the page and a revenue (reverse U shape) diagram on the bottom half.

I remember having a hard time understanding this, but you can think of this as just showing the relationship between PED and revenue — when PED increases, what will happen to revenue, and vice versa. Hope this helps!
thanks a lot!!!!!!!
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