a price of $4.00 each,SHAPE magazine sells 1.25 million copies of its magazine targeted to young women seeking a healthier lifestyle.If the price per issue is increased to $4.50 each,only 1 million copies will be sold.Fixed costs are $1 million and unit variable costs are $0.50 per magazine.Calculate the average revenue for SHAPE magazine at the higher price.
A) $0.50
B) $1.25
C) $4.00
D) $4.50
E) $8.50

Question

Quizplus · Accepted Answer

To calculate the average revenue at the higher price, we need to determine the total revenue and divide it by the number of magazines sold.

At $4.50 per magazine, the total revenue can be calculated as: 
Total revenue = Price per magazine x Number of magazines sold 
Total revenue = $4.50 x 1 million 
Total revenue = $4,500,000

Therefore, the average revenue can be calculated as: 
Average revenue = Total revenue / Number of magazines sold 
Average revenue = $4,500,000 / 1 million 
Average revenue = $4.50

Therefore, the correct answer is D, $4.50.

A Price of $4