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Explain about the elasticity and total revenue.
Elasticity and Total Revenue:
a. When demand for a good is elastic, a raise in price decreases total revenue. Then Sales effect > Price effect there.
b. When demand for a good is inelastic, a higher price raises total revenue. Then Price effect > Sales effect
c. When demand for a good is unit-elastic, an increase into price does not change whole revenue. Then Sales effect = Price effect.
A company is assessing a proposed 4-year project. The depreciable cost will involve the following: $300,000 for the equipment, $20,000 for shipping, and $30,000 for installation.
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