<P> As a result, the relationship between PED and total revenue can be described for any good: </P> <Ul> <Li> When the price elasticity of demand for a good is perfectly inelastic (E = 0), changes in the price do not affect the quantity demanded for the good; raising prices will always cause total revenue to increase . Goods necessary to survival can be classified here; a rational person will be willing to pay anything for a good if the alternative is death . For example, a person in the desert weak and dying of thirst would easily give all the money in his wallet, no matter how much, for a bottle of water if he would otherwise die . His demand is not contingent on the price . </Li> <Li> When the price elasticity of demand for a good is relatively inelastic (- 1 <E <0), the percentage change in quantity demanded is smaller than that in price . Hence, when the price is raised, the total revenue increases, and vice versa . </Li> <Li> When the price elasticity of demand for a good is unit (or unitary) elastic (E = - 1), the percentage change in quantity demanded is equal to that in price, so a change in price will not affect total revenue . </Li> <Li> When the price elasticity of demand for a good is relatively elastic (- ∞ <E <- 1), the percentage change in quantity demanded is greater than that in price . Hence, when the price is raised, the total revenue falls, and vice versa . </Li> <Li> When the price elasticity of demand for a good is perfectly elastic (E is − ∞), any increase in the price, no matter how small, will cause the quantity demanded for the good to drop to zero . Hence, when the price is raised, the total revenue falls to zero . This situation is typical for goods that have their value defined by law (such as fiat currency); if a 5 dollar bill were sold for anything more than 5 dollars, nobody would buy it, so demand is zero . </Li> </Ul> <Li> When the price elasticity of demand for a good is perfectly inelastic (E = 0), changes in the price do not affect the quantity demanded for the good; raising prices will always cause total revenue to increase . Goods necessary to survival can be classified here; a rational person will be willing to pay anything for a good if the alternative is death . For example, a person in the desert weak and dying of thirst would easily give all the money in his wallet, no matter how much, for a bottle of water if he would otherwise die . His demand is not contingent on the price . </Li> <Li> When the price elasticity of demand for a good is relatively inelastic (- 1 <E <0), the percentage change in quantity demanded is smaller than that in price . Hence, when the price is raised, the total revenue increases, and vice versa . </Li>

The absolute value of price elasticity of demand