The Total Revenue Test Says That If a Price Decrease

question 48

Multiple Choice

The total revenue test says that if a price decrease leads to

• A) an increase in total revenue, demand is income elastic.
• B) a decrease in total revenue, demand is income inelastic.
• C) a decrease in total revenue, demand is price inelastic.
• D) a decrease in total revenue, supply is price inelastic.
• E) a decrease in total revenue, supply is price elastic.

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Definitions:

Production Possibilities Curve

The potential total output combinations of any two goods for an economy.

Production Possibility Curve

A graphical representation showing the maximum combination of goods or services that can be produced with available resources and technology.

Economic Resource

Assets or inputs used in the production of goods and services, including land, labor, capital, and entrepreneurship.

Affluent Society

refers to a society that enjoys a higher standard of living due to significant wealth accumulation, leading to a focus on consumerism and allocation of resources beyond basic needs.