You are a manager in a company that has developed a new type of air fryer used to cook foods. You negotiate a contract with Jones Manufacturing Inc which will manufacture and sell your air fryer. Your company will receive a royalty of 10% of the total revenues that Jones Manufacturing collects from the sale of the air fryer. It is also agreed that Jones Manufacturing can set the price of the air fryer.

One year Jones Manufacturing decided to increase the price of the air fryer by 15%. It was reported that the quantity of the air fryer sold decreased by 10%.

Soon after learning this, your boss says to you in a meeting: since the demand for our air fryer dropped so much, our company did not make any money from the higher price. I want you to go to Jones Manufacturing and get them to drop their price.

Using concepts learned in Topics 1-3, please comment on the above quote by your boss . How would you respond to your boss? Did your company make less money when Jones Manufacturing increased its price by 15%? Explain