What causes total revenue to increase?

Isn’t it crazy how much goes into figuring out how to make the most money? Like, if you’re selling something, how do you know what the perfect price is? You know, the one that brings in the most cash? It all comes down to this “total revenue” thing.

So, say I’m selling handmade earrings, right? If I bump up the price from $20 to $25 and I still sell roughly the same amount, then boom! More money for me! Total revenue goes up! Conversely, if I lower the price to, let’s say, $15, thinking I’ll sell a ton more… well, I might sell more, sure. But what if I don’t sell enough more to make up for that $5 price drop? Then, I’m actually making less overall. Ouch. Like, that one time I tried to sell my knitted scarves for super cheap at the craft fair? I sold a lot, yes, but I barely made any profit. It was disheartening, to say the least!

The really tricky part is finding that sweet spot. Imagine a scenario where the change in price is perfectly balanced by how much demand changes. So, like, if I raise the price, fewer people buy, but the higher price perfectly cancels out the lower sales. Or if I lower the price, more people buy, but the extra sales perfectly cancel out the lower price. Get it? In that case, it wouldn’t matter if I raised or lowered the price – my total earnings would be the same. I remember reading somewhere that economists call this “unit elastic demand.” Or something like that. Honestly, it’s kind of mind-boggling, isn’t it? Trying to find that perfect balance point feels like searching for a needle in a haystack! So frustrating sometimes!