Total revenue from the sale of a good will decrease if
A)income increases and the good is normal.
B)its price rises and demand is elastic.
C)its price rises and demand is inelastic.
D)income falls and the good is an inferior good.
E)its price falls and demand is elastic.

Question

Quizplus · Accepted Answer

According to the law of demand, as the price of a good increases, the quantity demanded decreases. If demand for a good is elastic, a small increase in price will result in a large decrease in quantity demanded, leading to a decrease in total revenue. Therefore, if the price of a good rises and demand is elastic, the total revenue from the sale of the good will decrease.

Total Revenue from the Sale of a Good Will Decrease