Question

If the store currently charges a price of $50, then increases that price to $60, what happens to total revenue from shoe sales (calculate P * Q before and after the price change)? Repeat the exercise for initial prices being decreased to $40 and $20, respectively. 

Answer 1

If the store charges $50, then the revenue $= 50 \times 200 = \$10000$

If the store charges $60, then the revenue $= 60 \times 100 = \$6000$

The total revenue decreases in this case

Now, when the price decreases to $40, then the total revenue is $= 40 \times 300 = \$12000$

Further reducing the price to $20, the total revenue is $= 20 \times 500 = \$10000$