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24 June, 15:02

What will most likely happen if a toy supplier sets a price too low for a product?

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  1. 24 June, 15:09
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    The toy supplier won't be getting as much money, and he might not be getting a profit.
  2. 24 June, 15:24
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    Explanation: The suppliers's sales can increase as well as decrease. As we know,

    Sales Revenue = Price x quantity

    Therefore, if he is able to increase his sale such that it compensates for the decrease in price, than the Sale revenue will increase and vice versa

    For example, I was able to sell 10 pencils at a cost of $2 each. Therefore, my Sale revenue was $20. Now if i reduce the price to $1.5, and my sales quantity increases to 15, my sales Revenue will increase to $ 22.5, but if my sale quantity does not increase, my Sale revenue will decrease to $15.
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