Kristin owns a bakery called Kristin's Cakes n' Such and is considering lowering the price of her cakes. Kristin polls her customers and determines that she can sell 100 cakes each week when she charges $25 each. She also discovers that for every $1 decrease in the price of the cake, she will sell 5 more cakes. The graph below represents Kristin's projected weekly revenue for each decrease in price.
2800
2600 point one reached (2.5, 2531.25)
2400
2200
2000
1800
1600
1400
1200
1000
800
600
400
200
0
Revenue (in dollars)
10
20
point 2(25, 0)
30
40
Decrease in Price (in dollars)
Based on the information provided and the graph, it seems that Kristin's optimal price for the cakes would be $20. At this price point, Kristin would sell 125 cakes per week and earn a revenue of $2500, which is the highest revenue she can achieve according to the graph.
By lowering the price of her cakes to $20, Kristin would increase her sales volume and make up for the lower price with higher sales. This would result in higher revenue for her bakery in the long run.