Which of the following statements is TRUE with respect to the relationship between price and revenue?
A) When business is good, a price increase will increase revenue.
B) When business is bad, a price increase will increase revenue.
C) Price cuts must be offset by an increase in sales volume to keep the same level of revenue.
D) In highly differentiated markets, price cuts will capture greater market share.
E) In highly commoditized markets, price cuts will increase revenue.

Question

Quizplus · Accepted Answer

Price cuts reduce revenue per unit, so to maintain the same revenue level, sales volume must increase to compensate for the lower price per unit.

Which of the Following Statements Is TRUE with Respect to the Relationship