Asked by Chris Huynh on Jul 16, 2024
Verified
After a price decrease,the quantity effect tends to:
A) decrease total revenue.
B) increase total revenue.
C) make the price effect stronger.
D) make the price effect weaker.
Quantity Effect
The change in the quantity of a product demanded or supplied in response to a change in price.
Total Revenue
The total income a firm receives from selling its goods or services, calculated by multiplying the price per unit by the number of units sold.
- Gain an insight into how variations in quantity and price influence total revenue.
Verified Answer
JH
Jennifer HaddockJul 23, 2024
Final Answer :
B
Explanation :
The quantity effect refers to the increase in demand that comes with a price decrease. This increase in quantity sold can offset the decrease in price and result in an overall increase in total revenue. Therefore, after a price decrease, the quantity effect tends to increase total revenue.
Learning Objectives
- Gain an insight into how variations in quantity and price influence total revenue.