500 units of a product are demanded when the price for a product is £5. When the price increases to £6, only 400 units of the product are demanded. The revenue lost from increasing the price is:
A) - £100.
B) - £500.
C) - £400.
D) £600.

Question

Quizplus · Accepted Answer

The revenue lost from increasing the price is the difference between the revenue at the old price and the revenue at the new price. At the old price of £5, the revenue is 500 * £5 = £2500. At the new price of £6, the revenue is 400 * £6 = £2400. Therefore, the revenue lost from increasing the price is £2500 - £2400 = £100.

500 Units of a Product Are Demanded When the Price