Total Revenue and Demand Quiz

What happens to total revenue when the price of a product with elastic demand decreases?

• Total revenue increases

• Total revenue decreases

• Total revenue remains the same

• Total revenue first decreases, then increases

When demand is inelastic, increasing the price of a product will likely result in:

• A decrease in total revenue

• No change in total revenue

• An increase in total revenue

• A proportional change in total revenue

If a company lowers the price of its product and notices a significant rise in total revenue, the demand for this product is likely to be:

• Perfectly inelastic

• Elastic

• Inelastic

• Unitary elastic

What happens to total revenue if the price of a product increases in a market where demand is elastic?

• Total revenue increases

• Total revenue decreases

• Total revenue remains unchanged

• Total revenue depends on supply

In the case of unitary elastic demand, how does a price change affect total revenue?

• Total revenue increases

• Total revenue decreases

• Total revenue remains unchanged

• Total revenue fluctuates

Which of the following is true about the total revenue test?

• If demand is elastic, total revenue and price move in the same direction.

• If demand is inelastic, total revenue and price move in opposite directions.

• If demand is unitary elastic, total revenue remains constant regardless of price changes.

• If demand is inelastic, total revenue decreases as price increases.

When demand is perfectly inelastic, what happens to total revenue if price increases?

• Total revenue decreases

• Total revenue remains the same

• Total revenue increases

• Total revenue becomes zero

If a product’s demand is inelastic, which of the following strategies would likely maximize total revenue?

• Lower the price significantly

• Increase the price slightly

• Maintain the current price

• Offer discounts and promotions

How does the price elasticity of demand affect a company’s pricing strategy to maximize revenue?

• If demand is elastic, reduce prices to increase revenue.

• If demand is inelastic, reduce prices to increase revenue.

• If demand is inelastic, maintain constant prices.

• If demand is unitary elastic, increase prices to increase revenue.

Which of the following is correct about elastic demand and total revenue?

• When demand is elastic, increasing price increases total revenue.

• When demand is elastic, decreasing price increases total revenue.

• When demand is elastic, total revenue is unaffected by price changes.

• When demand is elastic, total revenue depends only on quantity supplied.