sorry i misspoke there's actually two more videos uh so if you continued from the last one last thing i said it was one more um i forgot about this next one which is actually going to be a little bit short it's just one slide but it's its own topic okay so here's my question does raising price mean more revenue okay revenue is something you're hear a lot in this class is the first time we've really introduced its revenue is sales so to get revenue is simply price times quantity so for example if i sell 10 pizzas and they're 20 each my revenue is 20 two hundred dollars twenty dollars per pizza ten pizzas ten times twenty two hundred dollars that's my revenue so if you raise your prices do you get more revenue if you raise prices that means you're selling something for more expensive does that mean more money it depends on elasticity so that's one tool elasticity has it it is the relationship between the price change and your revenue okay now i want to say here really quickly sorry about scratching the back of my throat is that a a firm's goal is not to maximize revenue rather it's to maximize profits so we're going to see in a few chapters we're going to talk a lot about firm theory and we'll talk about maximizing profits but revenue is part of it right because profits is you take the revenue and you subtract how much it costs you to make it and so there are times where a higher revenue can actually mean the less profits if it's if your costs are increasing too so keep i just want to say that but for now we're just talking about revenue when you raise prices the increase in price will raise the revenue but the subsequent decrease in quantity sold decreases your revenue right because that's our understanding is with demand when the price goes up your quantity demanded goes down so if you raise your prices you're going to sell fewer so you have two fighting forces you raise your price one force the fact the price is more expensive is pushing your revenue up the other force that you're selling a few items is pushing your revenue down which one wins well whichever one's stronger and elasticity tells us which one's stronger if the demand is elastic that means that the change in quantity is greater than the change in the price the change in quantity is the stronger one so if you raise prices that's the weak one right and so the decrease in quantity is going to is going to drown out the in the increase in prices and so you're going to lose revenue if demand is inelastic then the change in quantity is less than the change in price so if you raise prices you're going to make more money and make more revenue because the change in quantity is smaller than the change in price one thing i do to help me remember the way it goes is i think about that perfectly elastic perfectly inelastic case so remember perfectly elastic means you raise your price do you have no more sales yeah you're going to lose revenue there perfectly inelastic means you can raise your price and you'll sell the same amount yeah you're going to gain revenue there and so that helps me remember them so perfectly inelastic raising prices more revenue perfectly elastic raising prices less revenue and if you lower prices it switches because when you lower prices you still have the good part you're going to sell more versus the bad part you're going to get less per item you sell so when you have elastic demand the change in quantity of the good part is stronger so if you lower your prices and you sell a lot more items then elastic demand tells you revenue will go up whereas with inelastic demand you can lower your prices but guess what people are going to buy it anyway you're just hurting your revenue okay so there you go um and of course if demand is unitary then the change is the same and the revenue is the same that means if you raise your prices by 20 you're going to lose 20 of your sales and your revenue stays the same okay so that's it now it's going to be the last video after this one