When a good or service is priced within its elastic region, it definitely worthwhile for firms to lower prices. ''You may make less profit per item, but you'll make more than enough extra sales to cover this loss of profit. In fact, you will make more profit overall.''

However, when a firm sells at a price associated with unit elasticity, its revenue is at a maximum.

The firm may lower prices even further, but the increase in quantity sold will not be great enough to increase profits. In fact, profits will fall.

We show this in the total revenue curve (shown above). There is a price per unit that maximises profit!