You can now sell 200 cups of lemonade at 60 cents per cup, but demand is dropping at a rate of 10 cups per week each week. Assuming that raising the price doesn't affect the demand, how fast do you have to raise your price if you want to keep the revenue constant?
A)3 cents per week
B)6 cents per week
C)5 cents per week
D)2 cents per week
E)7 cents per week

Question

Quizplus · Accepted Answer

To keep revenue constant when demand drops, you need to adjust the price. Initially, the revenue is 200 cups * $0.60 = $120. With a demand drop of 10 cups per week, to maintain $120 revenue, if you sell 190 cups the next week, the price per cup needs to be $120 / 190 = $0.63. This is a $0.03 increase, or 3 cents per week.

You Can Now Sell 200 Cups of Lemonade at 60