Use the following to answer questions:
-(Table: Demand for Lenny's Coffee) Look at the table Demand for Lenny's Coffee. Lenny's Café is the only source of coffee for hundreds of miles in any direction. Lenny is selling two cups of coffee. If he lowers the price and sells three cups of coffee, the _____ effect will dominate the _____ effect, and total revenue will _____.
A) quantity; price; decrease
B) price; quantity; increase
C) price; quantity; decrease
D) quantity; price; increase

Question

Use the following to answer questions: 
-(Table: Demand for Lenny's Coffee) Look at the table Demand for Lenny's Coffee. Lenny's Café is the only source of coffee for hundreds of miles in any direction. Lenny is selling two cups of coffee. If he lowers the price and sells three cups of coffee, the _____ effect will dominate the _____ effect, and total revenue will _____.
A) quantity; price; decrease 
B) price; quantity; increase 
C) price; quantity; decrease 
D) quantity; price; increase

Quizplus · Accepted Answer

When Lenny lowers the price and sells more coffee, the quantity effect (selling more units) dominates the price effect (lower price per unit), leading to an increase in total revenue.

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