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Consider the market for a new \( C D \), where the price is initially \( \$ 12.00 \) and 12 thousand copies are sold, as indicated in the figure at point \( A \). The music company is considering lowering the price to \( \$ 10.00 \), at which price 20 thousand copies would be sold. What is total revenue at the initial price (at point \( A) \) ? Revenue is initially \( \$ \square \) thousand.

Ask by Whittaker Allan. in the United States
Mar 17,2025

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The total revenue at the initial price is \$144 thousand.

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To calculate the total revenue at the initial price of \( \$ 12.00 \) when 12 thousand copies are sold, you multiply the price by the quantity sold. Total revenue = Price × Quantity Total revenue = \( 12.00 \) × \( 12 \) thousand = \( \$ 144 \) thousand. So, the revenue is initially \( \$ 144 \) thousand. Now, let's look at the price drop to \( \$ 10.00 \) where 20 thousand copies would be sold. The new total revenue would be: Total revenue = \( 10.00 \) × \( 20 \) thousand = \( \$ 200 \) thousand. This highlights how adjusting the price can dramatically change revenue dynamics in a market!

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