A price cut will increase the total revenue a firm receives if the demand for its product is:
A) unit inelastic.
B) unit elastic.
C) inelastic.
D) elastic.

Question

Quizplus · Accepted Answer

When demand is elastic, a price cut leads to a proportionally larger increase in quantity demanded, which increases total revenue. Elastic demand means that consumers are more responsive to price changes.

A Price Cut Will Increase the Total Revenue a Firm