firmís revenue is calculated using the following formula:
volume of goods sold ī
average selling price
firm wanting to increase its revenue could raise the price or sell more
units. Remember that raising the
price of an elastic good will lead to a reduction in revenue and raising the
price of an inelastic good will lead to an increase in revenue.
will often adopt one of two approaches:
- Sell at a low price
hoping to attract a high level of sales.
- Sell at a high price
in order to maximise the revenue from the items sold.