Question

2. Which of these would an item's producer be most likely to do if total revenue on that item began to

drop?
a. produce less of that item
b. raise the price of that item
c. lower the price of that item
d. produce more of that item

Answer 1

c. lower the price of that item

Step-by-step explanation:

If the revenues from a product begin to fall, most probably the product is entering the decline stage of its product cycle. In the initial stages of the decline stage, sales begin to drop.

When sales begin to drop, producers implement strategies to try and keep the product in the market for a longer time. One of the ways of maintaining sales is to offer reduced prices. A producer cuts prices to woe customers to continue buying the product.