When price rises, total revenue
A)always rises because the quantity purchased does not change.
B)may rise or fall, depending on whether the quantity purchased rises or falls.
C)always falls because the quantity purchased always falls.
D)may rise or fall, depending on how much the quantity purchased falls.
E)may rise or fall, depending on whether the quantity purchased changes.

Question

Quizplus · Accepted Answer

Total revenue may rise or fall when prices change, depending on the elasticity of demand. If the quantity purchased decreases slightly with a price increase, total revenue could still rise. Conversely, if the quantity purchased decreases significantly, total revenue could fall.

When Price Rises, Total Revenue