Homework Answers
Answer :
Option C) it's total revenue will decrease, since the percentage increase in price is less than the percentage decrease in quantity demanded
Explanation : Revenue when price = $16
Revenue = P*Q = 16 *50 = $800
Revenue when price = $17
Revenue = 17*40 = $780
Thus here we see on increasing the price, revenue decreased by $20
Percentage increase in price = (1/16) * 100 = 6.25%
Percentage decrease in quantity = (10/50) * 100 = 20%
Thus answer is option C)
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