Consider the Demand Curve in the Graph Shown

question 73

Multiple Choice

Consider the demand curve in the graph shown. Suppose price is initially $11 and falls to $8. Which of the following statements is true?

• A) The quantity effect will outweigh the price effect, and total revenue will rise.
• B) The quantity effect will outweigh the price effect, and total revenue will fall.
• C) The price effect will outweigh the quantity effect, and total revenue will rise.
• D) The price effect will outweigh the quantity effect, and total revenue will fall.

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Definitions:

Markup

The amount added to the cost of goods to cover overhead and profit, determining the selling price.

Selling Price

The amount of money charged for a product or service, determined by adding a profit margin to the product cost.

Competition-Based Concept

A pricing strategy that sets prices based on what competitors charge for similar products or services.

Economic Theory Approach

A perspective or method that applies economic theories and principles to analyze and solve various problems or to understand behavior.