A decrease in price will result in an increase in total revenue if:
A)the percentage change in quantity demanded is less than the percentage change in price.
B)the percentage change in quantity demanded is greater than the percentage change in price.
C)demand is inelastic.
D)the consumer is operating along a linear demand curve at a point at which the price is very low and the quantity demanded is very high.

Question

Quizplus · Accepted Answer

The correct answer is B because when the percentage change in quantity demanded is greater than the percentage change in price, it indicates that demand is elastic. In such cases, a decrease in price leads to a proportionally larger increase in quantity demanded, which increases total revenue.

A Decrease in Price Will Result in an Increase in Total