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Company Y thinks they can increase sales by lowering the price of their product. If they currently sell 2,000 units a month at $110, how many units will they have to sell at $100 to get the same amount of revenue?

Question

Company Y thinks they can increase sales by lowering the price of their product. If they currently sell 2,000 units a month at 110,howmanyunitswilltheyhavetosellat110, how many units will they have to sell at 100 to get the same amount of revenue?

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Solution

Step 1: Calculate the current revenue.

The current revenue is the product of the current price and the number of units sold.

Current revenue = Current price * Number of units sold = 1102000=110 * 2000 = 220,000

Step 2: Calculate the number of units to be sold at the new price to get the same revenue.

The number of units to be sold at the new price is the quotient of the current revenue and the new price.

Number of units to be sold = Current revenue / New price = 220,000/220,000 / 100 = 2200 units

So, Company Y will have to sell 2200 units at $100 to get the same amount of revenue.

This problem has been solved

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