Question

A real estate developer is offering identical houses for sale for $350,000 each, and has 20 willing customers. The developer is considering lowering the price to $300,000, since at that price there would be an additional 3 customers willing to purchase houses.

What would be the developer’s change in revenue from lowering the price in this way?
a. -$100,000
b. $100,000
c. $900,000
d. $1,050,000

Answer 1

Change in revenue will be -$100000

So option (a) will be correct answer

Step-by-step explanation:

We have given amount of sale for each house = $350000

It is given 20 costumers are willing to sell

Now it is given that if price is lowering to $300000 then 3 more costumers are willing to purchase.

We have to find the developer’s change in revenue.

So change in revenue will be equal to = $350000×20 - $300000×(20+3) = -$100000

So change in revenue will be equal to -$100000

So option (a) will be correct answer.