A monopolist can sell 26,000 units at a price of $10 per unit.Lowering price by $1 raises the quantity demanded by 500 units.What is the change in total revenue resulting from this price change?

Question

Quizplus · Accepted Answer

The initial revenue is 26,000 units * $10 = $260,000. After lowering the price by $1, the price becomes $9, and the quantity demanded increases by 500 units to 26,500. The new revenue is 26,500 units * $9 = $238,500. The change in total revenue is $238,500 - $260,000 = -$21,500.

A Monopolist Can Sell 26,000 Units at a Price of $10