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The demand for gasoline is price inelastic, and total revenue moves in the
direction of the price change. When price rises, total revenue rises. Recall
that in our example above, total spending on gasoline (which equals total
revenues to sellers) rose from $4,000 per day (=1,000 gallons per day
times $4.00) to $4037.50 per day (=950 gallons per day times $4.25 per
gallon).
When demand is price inelastic, a given percentage change in price results
in a smaller percentage change in quantity demanded. That implies that
total revenue will move in the direction of the price change: an increase in
price will increase total revenue, and a reduction in price will reduce it.
Consider again the example of pizza that we examined above. At a price of
$9 per pizza, 1,000 pizzas per week were demanded. Total revenue was
$9,000 per week (=1,000 pizzas per week times $9 per pizza). When the
price rose to $10, the quantity demanded fell to 900 pizzas per week. Total
revenue remained $9,000 per week (=900 pizzas per week times $10 per
pizza). Again, we have an average quantity of 950 pizzas per week and an
average price of $9.50. Using the arc elasticity method, we can compute:
Percentage change in quantity demanded=−100/950=−10.5%
Percentage change in price=$1.00/$9.50=10.5%
Price elasticity of demand=−10.5%/10.5%=−1.0

Demand is unit price elastic, and total revenue remains unchanged.
Quantity demanded falls by the same percentage by which price increases.
Consider next the example of diet cola demand. At a price of $0.50 per can,
1,000 cans of diet cola were purchased each day. Total revenue was thus
Attributed to Libby Rittenberg and Timothy Tregarthen
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