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 change in total revenue due to the price change?
A) Total revenue increases by $350.
B) Total revenue increases by $3,400.
C) Total revenue decreases by $1,650.
D) Total revenue decreases by $2,275.

Question

Quizplus · Accepted Answer

To find the change in total revenue, we need to multiply the quantity sold by the price. 
At $10 price, revenue = 500 x $10 = $5,000 
At $6 price, revenue = 1,400 x $6 = $8,400 
The change in revenue is the difference between the two: $8,400 - $5,000 = $3,400 
Therefore, the correct answer is B.

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