If Price Is Cut and Demand Is Elastic, Total Revenue

question 1

Multiple Choice

If price is cut and demand is elastic, total revenue will rise because

• A)the change in quantity demanded is greater than the percent change in price.
• B)the percent change in quantity demanded is greater than the change in price.
• C)the percent change in quantity demanded is greater than the percent change in price.
• D)customers can't find substitutes.

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Definitions:

Single-Zone Pricing

A pricing strategy where a seller charges the same price for a product or service, regardless of where the buyer is located.

FOB Origin Pricing

A term used in shipping indicating that the buyer takes responsibility for shipping costs and risk of loss from the seller’s location.

Freight-Absorption Pricing

A pricing strategy where the seller absorbs all or part of the freight charges to encourage business in competitive markets or remote locations.

Resale Price Maintenance

An agreement between a supplier and a retailer in which the retailer agrees to sell a product at a specific price or above.