If price increases, quantity demanded decreases and, therefore, total revenue must fall.

Question

Quizplus · Accepted Answer

This statement is not always true. In some cases, when the price of a product increases, demand may not decrease proportionally, leading to an increase in total revenue. This is especially true for products with inelastic demand, where consumers are willing to pay more for the product regardless of price. Therefore, the relationship between price and total revenue is dependent on the elasticity of demand.

If Price Increases, Quantity Demanded Decreases And, Therefore, Total Revenue