ABC Light Bulbs has a monopoly on a new style of LED lighting. Right now, they sell 5 million bulbs at a unit price of $10. If they lower their price to $8, they will sell 7 million units. What is the price effect in this scenario?
a. ABC is unable to influence the price of its products if output exceeds 7 million bulbs.
b. ABC earns an additional $18 for every bulb it sells over 5 million.
c. ABC loses $10 million in revenue by selling at a lower price to its original customers.
d. ABC gains $6 million in revenue by selling more bulbs to new customers.
c. ABC loses $10 million in revenue by selling at a lower price to its original customers.
You might also like to view...
A firm raises the price it charges. The firm's total revenue decreases. What can we conclude about the price elasticity of demand?
A) Demand is elastic. B) Demand is unit elastic. C) Demand is inelastic. D) Demand is perfectly inelastic. E) Not enough information is given to conclude anything about price elasticity of demand.
Matt Taylor is one of the fishermen who comes back to the dock at the end of a fishing day with 720 fish in his boat. He and 40 other fishermen crowd the dock with their fish supplies while hundreds of people, eager to buy fish, make their demands felt on the market. Matt knows that for that fishing day
a. price cannot change b. the market-day supply curve is vertical c. the market-day demand curve is vertical d. quantity demanded is fixed e. his short-run supply curve is upward sloping
The substitution effect of a price change is the change in consumption that results from the movement to a new indifference curve
a. True b. False Indicate whether the statement is true or false
If the interest rate is 12.5 percent, what is the present value of $200 received in one year?
A. $197 B. $225 C. $177.78 D. $25