Question

A monopolist can sell 8,000 units at a price of $15. Lowering price by $2 raises the quantity demanded by 2,000 units. What is the change in total revenue that results from this price change?

Answer 1

$10,000

Step-by-step explanation:

In this question, we have to compare the total revenue in both the cases

In the first case,

Number of selling units = 8,000 units

Selling price = $15

So, the total revenue would be

= 8,000 units × $15

= $120,000

In the second case,

Number of selling units = 10,000 units

Selling price = $13

So, the total revenue would be

= 10,000 units × $13

= $130,000

So, the change in total revenue would be

= $130,000 - $120,000

= $10,000