ECONOMICS

Detailed explanation-1: -In simple terms: a price reduction will likely bring new customers or sales. A price increase, on the other hand, causes customers to buy less product, meaning you’re losing sales.

Detailed explanation-2: -Normally, as the selling price per unit rises, the break-even point in units declines. Therefore, a decline in selling price per unit will cause a rise in the break-even point. Sales decrease would lead to lesser contribution margin which in turn would lead to lesser fixed costs being funded by sales.

Detailed explanation-3: -The law of demand states that for nearly all products, the higher the price, the lower the demand (Zamry & Nayan, 2020). In other words, sales will fall if prices are put up. However, higher prices can also mean higher profits.

Detailed explanation-4: -If the price goes up, the quantity demanded goes down (but demand itself stays the same). If the price decreases, quantity demanded increases. This is the Law of Demand. On a graph, an inverse relationship is represented by a downward sloping line from left to right.