What does the sign (positive/negative) of the total revenue test tell us about the demand for the good? When the total revenue test is negative (a price cut decreases total revenue), the demand for the good is __ When the total revenue test is positive (a price cut increases total revenue), the demand for the good is __ A. unit elastic; elastic C. inelastic; unit elastic D. inelastic; elastic

## Step 1<br />The total revenue test is a method used to determine the elasticity of demand for a good. The elasticity of demand measures how much the quantity demanded of a good responds to a change in its price.<br /><br />## Step 2<br />When the total revenue test is negative, it means that a decrease in price leads to a decrease in total revenue. This indicates that the demand for the good is inelastic. Inelastic demand means that the percentage change in quantity demanded is less than the percentage change in price.<br /><br />## Step 3<br />On the other hand, when the total revenue test is positive, it means that a decrease in price leads to an increase in total revenue. This indicates that the demand for the good is elastic. Elastic demand means that the percentage change in quantity demanded is greater than the percentage change in price.