Question

A monopolist can sell 26,000 units at a price of $30 per unit. Lowering price by $1 raises the quantity demanded by 1,000 units. What is the change in total revenue resulting from this price change

Answer 1

If the company lowers the sales price by $1, income will increase by $3,000

Step-by-step explanation:

Giving the following information:

A monopolist can sell 26,000 units for $30 per unit. Lowering price by $1 raises the quantity demanded by 1,000 units.

First, we need to calculate current sales revenue:

Sales= 26,000*30= $780,000

Now, with the lower price:

Sales= 27,000*29= $783,000

If the company lowers the sales price by $1, income will increase by $3,000