Credit Sprint / Practice problems / Total revenue and elasticity

Total revenue and elasticity practice problems

Microeconomics Unit 2. Try each one, then open the worked solution. The Credit Sprint app generates unlimited new versions with fresh numbers.

Problem 1.

A store changes its price from $29 to $30, and sales go from 420 to 330 units. By how much does total revenue change? (Use a negative number for a decrease.)

Show solution

New TR = $30 × 330 = $9,900. Old TR = $29 × 420 = $12,180. Change = $-2,280. Price and TR moved in opposite directions, so demand is elastic here.

Problem 2.

A store changes its price from $21 to $22, and sales go from 860 to 840 units. By how much does total revenue change? (Use a negative number for a decrease.)

Show solution

New TR = $22 × 840 = $18,480. Old TR = $21 × 860 = $18,060. Change = $420. Price and TR moved together, so demand is inelastic here.

Problem 3.

A store changes its price from $22 to $19, and sales go from 340 to 460 units. By how much does total revenue change? (Use a negative number for a decrease.)

Show solution

New TR = $19 × 460 = $8,740. Old TR = $22 × 340 = $7,480. Change = $1,260. Price and TR moved in opposite directions, so demand is elastic here.

Problem 4.

A store changes its price from $28 to $26, and sales go from 420 to 550 units. By how much does total revenue change? (Use a negative number for a decrease.)

Show solution

New TR = $26 × 550 = $14,300. Old TR = $28 × 420 = $11,760. Change = $2,540. Price and TR moved in opposite directions, so demand is elastic here.

Problem 5.

A store changes its price from $7 to $6, and sales go from 380 to 480 units. By how much does total revenue change? (Use a negative number for a decrease.)

Show solution

New TR = $6 × 480 = $2,880. Old TR = $7 × 380 = $2,660. Change = $220. Price and TR moved in opposite directions, so demand is elastic here.

Problem 6.

A store changes its price from $13 to $11, and sales go from 420 to 530 units. By how much does total revenue change? (Use a negative number for a decrease.)

Show solution

New TR = $11 × 530 = $5,830. Old TR = $13 × 420 = $5,460. Change = $370. Price and TR moved in opposite directions, so demand is elastic here.