Tennis Products, Inc., produces three models of high-quality tennis rackets. The following table contains recent information on the sales, costs, and profitability of the three models:

Model	Average Quantity Sold	Current Price	Total Revenue	Variable Cost Per Unit	Contribution Margin Per Unit	Contribution Margin*
(Units/Month)	($)	($)	($)	($)	($)
A	30,000	30	900,000	15.00	15	450,000
B	10,000	35	350,000	18.00	17	170,000
C	20,000	45	900,000	20.00	25	500,000
Total			$2,150,000			$1,120,000

*Contribution to fixed costs and profits.The company is considering lowering the price of Model A to $27 in an effort to increase the number of units sold. Based on the results of price changes that have been instituted in the past, Tennis Products' chief economist estimates the arc price elasticity of demand to be -2.5. Furthermore, she estimates the arc cross elasticity of demand between Model A and Model B to be approximately 0.5 and between Model A and Model C to be approximately 0.2. Variable costs per unit are not expected to change over the anticipated changes in volume.

The proposal to cut the price of Model A to $27 would increase or decrease the total revenue from Model A from $900,000 to $_____.

. The contribution margin of Model A would increase, decrease, no change.

Now consider the entire line of tennis rackets. The price cut would the total revenue from $2,150,000 to

and the contribution margin from $1,120,000 to

. Based on this analysis, the firm lower the price of Model A.