Question

A monopolist can sell 10,000 units at a price of $5 per unit. Lowering price to all buyers by $1 raises the quantity demanded by 1,000 units. What is the change in total revenue resulting from this price change?

Answer 1

the revenue decreases by -$6000

Step-by-step explanation:

The computation of the change in revenue is shown below:

Total revenue at Price is 5

Now total revenue is

= $5 × 10,000 units

= $50,000

Total revenue at Price is 4

Now Total Revenue is

= $4 × 11,000

= $44,000

Now the difference is

= $44,000 - $50,000

= -$6,000

Hence, the revenue decreases by -$6000