Under which condition does total revenue increase?

Total revenue increases when either the price per unit or the quantity sold increases. This is grounded in the fundamental revenue equation: Total Revenue = Price × Quantity.

When the price of a product rises while the quantity remains unchanged, total revenue will increase. Similarly, if the quantity sold increases while the price remains constant, total revenue will also increase. Therefore, both scenarios lead to an upward movement in total revenue, making the condition applicable in broad terms.

In contrast, solely focusing on one aspect—like just price decreasing or total costs decreasing—does not universally guarantee an increase in total revenue. With a price decrease, for instance, total revenue may decrease unless the increase in quantity sold compensates for the loss from the lower price. Similarly, while reducing total costs can improve profitability, it does not directly impact the total revenue figure. Thus, the condition encompassing either an increase in price or a rise in quantity effectively captures all the scenarios in which total revenue can grow.