A Decrease in Price

question 115

Multiple Choice

A decrease in price:

• A) causes a decrease in total revenue due to the quantity effect.
• B) causes an increase in total revenue due to the price effect.
• C) does not cause a quantity effect when demand is perfectly inelastic.
• D) does not change quantity demanded if demand is elastic.

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Definitions:

Global Retail Development Index

An annual study that ranks countries based on the attractiveness and potential of their retail markets for investment by retail companies.

Trade Surplus

A situation where a country exports more goods and services than it imports, leading to a positive balance of trade.

Exporting

Producing goods in one country and selling them in another.

Joint Venture

Formed when a firm entering a new market pools its resources with those of a local firm to form a new company in which ownership, control, and profits are shared.