If a 10 percent increase in price leads to a 15 percent decrease in the quantity demanded of the good, as a result of the price change, the total revenue for this product will _ _________.
A)decrease
B)not change
C)double
D)increase

Question

Quizplus · Accepted Answer

The total revenue is calculated by multiplying the price by the quantity demanded. In this case, the price increased by 10 percent and the quantity demanded decreased by 15 percent. This means that the overall effect on revenue will be negative, as the increase in price is more than offset by the decrease in quantity demanded. Therefore, the total revenue will decrease.

If a 10 Percent Increase in Price Leads to a 15