Economics of Revenue and Price

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In summary, the conversation discusses the relationship between price and revenue, with the speaker wondering if high prices indicate growing demand. They also mention the concept of "elasticity" and factors that influence demand, such as information and spatial location. It is revealed that the conversation was about an assignment.
  • #1
domyy
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I'd like to know how increase in revenue in related to price.

If I have high prices compared to my competitors, and my revenue keeps growing...

what does that mean?

Does it mean my demand keeps growing even though I have high prices?

In this case, my firm is inelastic?
 
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  • #2


I don't think so, the term is reserved for "demand" isn't?
 
  • #3


I am so confused!
I need to put this together:

- Supply curve shifts to the left (supply is reduced)
- It has high prices compared to substitutes
- Higher revenues each year.

What is does that tell me about demand? What`s happening to demand?
 
  • #4


What kind of research is this?

Is this homework?

There are several factors why demand is still accepting the price. Two of them are information, and spatial location of the stores. There is a concept known as "Spatial monopoly".
 
  • #5


It was for my assignment. I already did it though. Hoping I am going to get a good grade. :)
 

1. What is the difference between revenue and price in economics?

Revenue refers to the total amount of money a company or government earns from selling goods or services, whereas price refers to the amount of money a customer pays for a single unit of a good or service. Revenue is calculated by multiplying the quantity of goods sold by the price per unit.

2. How does demand affect revenue and price?

Demand refers to the quantity of goods or services that customers are willing and able to purchase at a certain price. When demand increases, revenue and price typically increase as well. This is because customers are willing to pay more for a product that is in high demand.

3. What is the relationship between elasticity and revenue?

Elasticity is a measure of how responsive the quantity of goods demanded is to changes in price. When a good is highly elastic, a small change in price can greatly affect demand. In this case, a decrease in price can lead to an increase in revenue, as more customers are willing to purchase the good at the lower price.

4. How does competition impact revenue and price?

Competition can have a significant impact on revenue and price. In a competitive market, companies must price their goods competitively to attract customers. This can lead to lower prices and lower revenue for individual companies. However, in some cases, competition can drive innovation and improve the quality of goods, leading to higher prices and increased revenue for companies.

5. How do external factors, such as government policies or economic conditions, affect revenue and price?

External factors, such as government policies or economic conditions, can have a significant impact on revenue and price. For example, a change in tax policies can affect the cost of production, which can impact the price of goods and ultimately the revenue of companies. Economic conditions, such as a recession or inflation, can also affect consumer purchasing power and demand, which can impact revenue and price.

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