A decrease in demand will increase total revenue:
A)Always.
B)Only if supply is relatively inelastic.
C)Only if supply is relatively elastic.
D)Never.

Question

A decrease in demand will increase total revenue:
A)​Always.
B)​Only if supply is relatively inelastic.
C)​Only if supply is relatively elastic.
D)​Never.

Quizplus · Accepted Answer

A decrease in demand typically leads to a lower quantity being sold, which, assuming prices also decrease or stay the same, results in lower total revenue. Total revenue is calculated as the price per unit times the number of units sold, so a decrease in demand generally reduces total revenue, not increases it.

A Decrease in Demand Will Increase Total Revenue