An exporter estimates with certainty that a higher price for his product will decrease the volume of sales in a foreign market by . After having to increase the price by , the revenue obtained from sales in that market turned out to be . What would the revenue have been if the exporter had been allowed to sell at the old price?
An exporter estimates with certainty that a higher price for his product will decrease the volume of sales in a foreign market by . After having to increase the price by , the revenue obtained from sales in that market turned out to be . What would the revenue have been if the exporter had been allowed to sell at the old price?
Solution
✅ Correct Option: 2
Let's define our variables:
- Original price per unit
- Original volume sold
- Original revenue
After the price increase:
- New price per unit
- New volume sold
- New revenue
Using the relationship: New Revenue New Price New Volume
Since Original Revenue :
The revenue at the old price would have been INR Crores.