An Increase in Total Revenue Will Result If

question 395

Multiple Choice

An increase in total revenue will result if

• A) demand is inelastic and price increases.
• B) demand is elastic and price increases.
• C) demand is inelastic and price decreases.
• D) demand is unitary elastic and price decreases.

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Definitions:

Diminishing Marginal Utility

The principle that as a person increases consumption of a product, there is a decline in the marginal utility that person derives from consuming each additional unit of that product.

Income Effect

The change in an individual's or economy's income and how that change will affect the quantity demanded of a good or service.

Substitution Effect

The change in demand for a good that results from a change in its price, making consumers more likely to purchase more of a less expensive alternative or less of a more expensive one.

Demand Curves

Graphs showing the relationship between the price of a good and the quantity demanded by consumers, typically downward-sloping.