Ben used to sell imported silk ties for $20 each in his store. His sales averaged 30 ties a week. He pays $12 to buy the ties he sells. Ben wondered if he could increase his profit by raising his price to $25. He tried this for a month, but his sales fell to 20 ties a week. How much money did Ben take in at the old price, and what was his profit at the old price? How much income did he receive at the new price, and what was his profit at his new price? Should he keep the new price? Explain how this example demonstrates the law of demand.

Question

Is there an equation or formula I could use? I'm not getting this question.

Answer 1

20 * 30 = $600 he took in
(20 - 12) * 30 = $240 profit

25 * 20 = $500 he took in
(25 - 12) * 20 = $260 profit