Which of the following statements is true?
A)Whenever a firm raises its price its total revenue will increase.
B)When a firm lowers its price its total revenue may either increase or decrease.
C)Whenever a firm increases its quantity sold its revenue will increase.
D)Total revenue will equal zero when the demand for a product is unit elastic.

Question

Quizplus · Accepted Answer

When a firm lowers its price, there are two opposing effects on its total revenue: the increase in quantity sold and the decrease in price per unit. The impact on revenue will depend on the magnitude of these effects, and hence, it may either increase or decrease. Therefore, statement B is true, while statements A, C, and D are false.

Which of the Following Statements Is True