Micro 2.10 Total Revenue Test and Elasticity Review: Econ Concepts in 60 Seconds

Ezra Clifford explains the total revenue test, also known as the total expenditures test, focusing on inelastic and elastic demand curves. He describes how price changes affect total revenue in both scenarios, using examples like milk and sales events. A memory trick is provided to help remember the concepts without needing to draw graphs.

What is the total revenue test also known as?

• Total sales test

• Total profit test

• Total cost test

• Total expenditures test

In the context of inelastic demand, what happens to total revenue when the price increases?

• Total revenue increases

• Total revenue remains the same

• Total revenue decreases

• Total revenue fluctuates

Which of the following is an example of a product with inelastic demand?

• Luxury cars

• Designer clothes

• Electronics

• Milk

When demand is elastic, what happens to total revenue if the price decreases?

• Total revenue fluctuates

• Total revenue increases

• Total revenue remains the same

• Total revenue decreases

What mnemonic trick can help remember the relationship between price and total revenue for inelastic demand?

• Think of an 'E' shape

• Think of an 'I' shape

• Think of a 'C' shape

• Think of a 'T' shape