A Price Increase Will Cause an Increase in Total Revenue

question 133

Multiple Choice

A price increase will cause an increase in total revenue when:

• A) the price effect outweighs the quantity effect.
• B) the quantity effect outweighs the price effect.
• C) demand is perfectly elastic.
• D) demand is unit elastic.

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Definitions:

Consumer Behavior

The analysis of how consumers' preferences and economic decisions affect the demand for goods and services.

Marginal Utility

The change in total utility a person derives from consuming an additional unit of a good or service.

Total Utility

The overall satisfaction or benefit a person receives from consuming a certain amount of goods or services.

Utility Maximization

The principle that individuals or firms seek to allocate their resources in a manner that maximizes their satisfaction or utility.