Mr. Parker sells 10 bottles of wine per week at $50 per bottle. He can sell 11 bottles per week if he lowers the price to $45 per bottle. The quantity effect of the sale of an additional bottle would be _______, whereas the price effect of the sale of an additional bottle would be ________

Respuesta :

The quantity effect of the sale of an additional bottle would result in an increase in revenue by $45 whereas the price effect of the sale of an additional bottle would result in a decrease in revenue by $50.

What is sales revenue?

Sales revenue is the amount earned by a company by selling their manufactured goods or services

Given values:

For quantity effect (reduced price is constant and quantity changes)

Number of bottles sold at a normal price: 10

Number of bottles sold at a reduced price: 11

Price on the additional bottle (reduced price): $45

Computation of quantity effect on revenue:

[tex]\rm\ Quantity \rm\ effect =(\rm\ Number \rm\ of \rm\ bottles \rm\ at \rm\ a \rm\ reduced \rm\ price- \rm\ Number \rm\ of \rm\ bottles \rm\ at \rm\ a \rm\ normal \rm\ price) \times \rm\ Reduced \rm\ price\\\rm\ Quantity \rm\ effect =(11- 10) \times \$45\\\rm\ Quantity \rm\ effect =\$45[/tex]

For price effect (quantity is constant and the price is changing)

Number of bottles sold at a normal price: 10

Normal price: $50

Price on the additional bottle (reduced price): $45

Computation of price effect on revenue:

[tex]\rm\ Price \rm\ effect =(\rm\ Normal \rm\ price - \rm\ Reduced \rm\ price ) \times \rm\ Number \rm\ of \rm\ bottles \rm\ at \rm\ a \rm\ normal \rm\ price\\\rm\ Price \rm\ effect =\$50 -\$ 45 ) \times 10\\\rm\ Price \rm\ effect =\$50[/tex]

Therefore, the revenue increased by $45 in the quantity effect and decreased by $50 in the price effect on the additional sale.

Learn more about the quantity effect in the related link;

https://brainly.com/question/17322397

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