What are the total expenses?
Total expenditure is an economic term used to describe the total amount of money that is spent on a product in a given period of time. This amount is achieved by multiplying the amount of product purchased by the price for which it was purchased. The way the total expenditure changes over time depends on changes in prices in this time period. How much price change affects the amount of expenditure is closely related to how elastic demand for product could be. Economists
are constantly looking for ways to measure the relationship between the level of the price of a product and the corresponding consumers' behavior to this product. It's not as easy as reducing the price of the product and creating multiple purchases of this product. The level of demand is also an important factor in determining the price level of the greatest reaction to the product. The total expenditure spent on a given product is always tied to the level of price and demand.
to calculate the total expenditure of a particular product at a given time, the amount of product sold and the price,For which it was sold, it is necessary to know first. Imagine, for example, that the company sells cars and decides on a $ 20,000 price in the US (USD) for a single car. At that time, the company sells 200 cars at this price. Using this case, the total number of expenditures would be 20 £ 20,000 multiplied, which was $ 400,000.
Of course, the amount of cars sold was of course only determined by the price level at this particular time. When considering total expenditure, it is also important to consider the amount of demand for this car or any other product and how it affects the amount sold. Economists look at the elasticity of demand in detail when considering expenditure. The elasticity of demand is a measurement of how flexible could be the level of demand for a particular product.
In the case of total expenditure, there are three possible results that may occur from different levels of demand elasticity. If the demand for the product is relatively elastic, the level of expenditure will move in the opposite direction to any movementsBU prices. At relatively inflexible levels, expenses should move in the same direction as any price change. Finally, when demand at a basic level is known as unit elastic, there will be no price change at all on the amount of product expenditure.