e Method 2 : TOTAL REVENUE (EXPENDITURE/OUTLAY) METHOD tal Revenue : It the amount paid byCbuyel» and (eceivets by seller: omputed as the price of the goodgimes(multiply) the quantity sold. of a good, ording to Dr. Marshall, elasticity is measures on the basis of change in total expenditure (PQ) due to change in theprice pf the commodity. There are three Possibilitie (a price elasticity less than 1), price and total revenue If the price increases, total revenue also increases. [clasticlla price elasticity greatef'than 1), price and total revenue elastic) (a price elasticity exactly equal to 1), total revenue then the price changes Peres Aa ROME PO Re Aen teEd = 1 (Unitary en the price of a commodity fised or(falls)but total expenditure ns constant, then it will Ed is Unitary Elastic (Equals to one) Pees aie ROME Pn Ree SNeEd > 1 (Elastic Demand) When total expenditure (total Revenue) (increases) with fall in price) and total penditure (total Revenue) decreases with rise in price, then Ed for that commodity ater than one. PL Ten ee wt 4 8 32 KS ; Spb Total Exp. 8 2 tg J one 20 40 i Pees aie ROME Pn Ree None Ed < 1 (Inelastic Demand) When total expenditure increas®s,with all in prieey then Ed for that commodity is Less than one Ph > Tet So tel 24 32 ans 3g \s Pees aie ROMER MP Ree SNe