According to the total revenue test, a price cut increases total revenue if demand is
A) perfectly inelastic.
B) unit elastic.
C) elastic.
D) inelastic.

Question

Quizplus · Accepted Answer

The total revenue test indicates that a price cut increases total revenue if demand is elastic because consumers' percentage increase in quantity demanded is greater than the percentage decrease in price, leading to an overall increase in total revenue.

According to the Total Revenue Test, a Price Cut Increases