Question 3: Pricing decisions Total fixed costs are $15,000. Unit variable cost is $10. At current selling price of $25, you sell 1,000 units per month. If you reduce the price by 10%, sale volume will increase to 1,300 units. Compute profit at the original price: Compute profit at the reduced price: Should you reduce the price? YES, because profit will increase by $1,250 YES, because revenue will increase by $4,250 NO, because a lower price always reduces profit