How does total revenue change as one moves down a linear demand curve?
A)it increases
B)it decreases
C)it first increases, then decreases
D)it is unaffected by a movement along the demand curve

Question

Quizplus · Accepted Answer

Total revenue first increases then decreases as one moves down a linear demand curve due to the changing balance between price and quantity sold. Initially, lower prices lead to higher quantities sold, increasing total revenue. However, beyond a certain point, further price reductions lead to a decrease in total revenue as the gains from increased quantity sold do not offset the losses from lower prices.

How Does Total Revenue Change as One Moves Down a Linear