Scenario: When a monopolist charges $10 for its product, it sells 500 units of the product. When it lowers the price to $6, it sells 1,400 units of the product.
-Refer to the scenario above.What is the price effect of the price change?
A) $1,750
B) $2,000
C) $3,750
D) $5,400

Question

Quizplus · Accepted Answer

The price effect is calculated as the difference in total revenue before and after the price change. 
Before the price change, the total revenue was:
$10 x 500 units = $5,000

After the price change, the total revenue was:
$6 x 1,400 units = $8,400

The price effect is the difference between these two figures:
$8,400 - $5,000 = $2,400

Therefore, the best choice is B, with a price effect of $2,400.

Scenario: When a Monopolist Charges $10 for Its Product, It