A monopolist can sell 8,000 units at a price of $10 per unit. Lowering price to all buyers by $1 raises the quantity demanded by 500 units. What is the change in total revenue resulting from this price change?
A)$3,500
B)-$12,500
C)-$3,500
D)-$18,000
E)There is not enough information provided to answer the question.

Question

A monopolist can sell 8,000 units at a price of $10 per unit. Lowering price to all buyers by $1 raises the quantity demanded by 500 units. What is the change in total revenue resulting from this price change?
A)$3,500
B)-$12,500
C)-$3,500
D)-$18,000
E)​There is not enough information provided to answer the question.

Quizplus · Accepted Answer

The change in total revenue can be calculated by first finding the initial revenue (8,000 units * $10/unit = $80,000), then finding the new revenue after the price decrease (8,500 units * $9/unit = $76,500). The change in total revenue is the new revenue minus the initial revenue, which is $76,500 - $80,000 = -$3,500.

A Monopolist Can Sell 8,000 Units at a Price of $10