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Fact Pattern: Niro Company is a printer manufacturer. Niro's sales budget for the year is as follows: Product Volume (units) Price Inkjet printers 5,000 $120
Fact Pattern: Niro Company is a printer manufacturer. Niro's sales budget for the year is as follows: Product Volume (units) Price Inkjet printers 5,000 $120 Ink cartridge set 12,000 100 Laser printer 3,000 300 Niro is planning to increase the price of one product while keeping the prices of the other two products unchanged. To facilitate the forecast, the effects of every 5% change in the price of a product on the quantity demanded (in absolute percentages) of the three products are calculated, as summarized below. The ink cartridge set is a complementary product to inkjet printers, while laser printers are a substitute of inkjet printers. Effect on inkjet printer Effect on ink cartridge set Effect on laser printer 5% increase in inkjet printer price 7.5% 12.5% 5.0% 5% increase in ink cartridge set price 5.0% 15.0% 2.5% 5% increase in laser printer price 20.0% 20.0% 10.0% Question If Niro increases the price of its inkjet printers, total sales revenue would A. Increase by $87,750. B. Increase by $272,250. C. Decrease by $122,250. D. Decrease by $212,250
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