The total revenue test says
i.Demand is elastic if a decrease in price results in an increase in total revenue.
ii.Total revenue is maximized when demand is elastic.
iii.Total revenue is minimized when demand is unit elastic.
A) i only
B) i and ii
C) ii and iii
D) i, ii and iii
E) ii only

Question

Quizplus · Accepted Answer

The total revenue test indicates that demand is elastic if a decrease in price leads to an increase in total revenue. The statements about total revenue being maximized or minimized based on elasticity are incorrect; total revenue is maximized at unit elasticity, not when demand is elastic, and the concept of minimizing total revenue is not directly related to elasticity in this context.

The Total Revenue Test Says