Why Do Revenues Increase When Producers Decrease the Price of an Elastically

question 95

Multiple Choice

Why do revenues increase when producers decrease the price of an elastically demanded good?

• A) Increased sales more than make up for the loss in revenue per unit sold.
• B) Marginal costs decrease when the price of an elastically demanded good decreases.
• C) Marginal benefits increase when the price of an elastically demanded good decreases.
• D) They don't. Revenues increase when the price of an inelastic good decreases.

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Definitions:

P(A And B)

The probability that both event A and event B occur at the same time.

P(A|B)

The chance that event A will occur, assuming event B has occurred, indicative of a conditional probability.

P(B)

The probability of occurrence of event B in a statistical experiment.

P(A And B)

The likelihood that events A and B will happen simultaneously.