Hi could someone explain to me what the following means
If demand is elastic, a 1% price cut increases the quantity sold by more than 1%, total revenue increases.
If demand is inelastic, a 1% price cut increases the quantity sold by less than 1%, total revenue decreases.
If demand is unit elastic, a 1% price cut increases the quantity sold by 1%, total revenue does not change.
For example, is my interpretation for the first dot point correct? If a demand is elastic, then the consumer is more sensitive to price changes, thus if the price is cut then the consumer would want to buy more of the good, which means the total revenue for the firm producing the good will increase.
However I am having trouble with my interpretation of the second dot point.
If the demand is inelastic means the consumers are less sensitive to price changes, how does this relate to total revenues decreasing?