Question

An accountant increases the price he charges for his services by 66 percent. In​ response, the demand for his services decreases by 1818 percent. Will the​ accountant's revenue from his accounting services​ increase, decrease, or remain​ unchanged?

Answer 1

Decrease

Step-by-step explanation:

The accountant's revenue will decrease because the demand for his services has fallen by 1,818%, while the price he charges has only gone up by 66%.

The rise in prices will not be enough to cover the losses for such a deep fall in demand.

For example, suppose that before, the accountat used to complete 200 services a month for $100 per year, his total revenue is = 200 x $100 = $20,000.

Now, he will charge 68% more, the new service fee is $168, but demand for his services will now be a negative 3436 (200 x 1,818% = 3636), so his revenue will be 0, or even, negative (he could get into debt to afford his expenses).