If we decrease the selling price of our product, we can always expect a decrease in total revenue.

Question

Quizplus · Accepted Answer

This is not always true. It depends on the price elasticity of demand for the product. If the demand for the product is elastic, then a decrease in price will lead to an increase in quantity demanded that will outweigh the decrease in price, resulting in an increase in total revenue. However, if the demand is inelastic, then a decrease in price will lead to a decrease in total revenue.

If We Decrease the Selling Price of Our Product, We