Which of the following is true of a decrease in product prices?
A) The quantity effect always dominates the price effect.
B) The price effect always dominates the quantity effect.
C) When the quantity effect dominates the price effect, total revenue decreases.
D) When the price effect dominates the quantity effect, total revenue decreases.

Question

Quizplus · Accepted Answer

When the price effect dominates the quantity effect, it means that the reduction in price leads to a proportionally smaller increase in quantity sold, resulting in a decrease in total revenue. This is because the decrease in revenue per unit (due to the lower price) is not fully compensated for by selling more units.

Which of the Following Is True of a Decrease in Product