If an Increase in Prices Decreases Total Revenue in the Short

question 214

Multiple Choice

If an increase in prices decreases total revenue in the short run, what will it do to total revenue in the long run?

• A)​It will decrease total revenue in the long run.
• B)​It will increase total revenue in the long run.
• C)​It will leave total revenue unchanged in the long run.
• D)​Any of the above results are possible in the long run.

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Definitions:

Profit Maximization

The process by which a firm determines the price and output level that returns the greatest profit.

Deontological Theory

A moral philosophy that emphasizes the importance of duty and the inherent morality of actions, rather than outcomes or consequences.

Utilitarian Ethical Theory

An ethical theory suggesting that the best action is the one that maximizes utility, usually defined as that which produces the greatest well-being of the greatest number of people.

Profit Maximization Theory

The concept that businesses operate with the primary goal of increasing profits to the highest achievable level given their resources.