Priscilla sells 10 bottles of olive oil per week at $5 per bottle. She can sell 11 bottles per week if she lowers her price to $4.50 per bottle. The quantity effect would be an increase of _____, while the price effect would be a decrease of _____.

Question

Quizplus · Accepted Answer

The quantity effect is the increase in quantity sold due to the price decrease, which is 11 - 10 = 1 bottle. The price effect is the decrease in revenue per bottle, which is $5 - $4.50 = $0.50.

Priscilla Sells 10 Bottles of Olive Oil Per Week at $5