At which price does the retailer maximize total sales revenue? Selling Price Quantity Demanded
(in $ ) (in units)
$5)00 12,000
$6)00 9,500
$7)00 8,700
$8)00 7,000
A)$5.00
B)$6.00
C)$7.00
D)$8.00

Question

Quizplus · Accepted Answer

To maximize total revenue, the retailer needs to find the price point that maximizes the product of the selling price and quantity demanded. This is calculated by multiplying the two for each price point and comparing the results.

For $5.00, the revenue is: $5.00 x 12,000 = $60,000
For $6.00, the revenue is: $6.00 x 9,500 = $57,000
For $7.00, the revenue is: $7.00 x 8,700 = $60,900
For $8.00, the revenue is: $8.00 x 7,000 = $56,000

Therefore, the retailer would maximize total sales revenue by selling at a price of $7.00.

At Which Price Does the Retailer Maximize Total Sales Revenue