www.activeLearningLabs.com     It's Your Business - Electric Skateboard Company
  
  Training: Price, Demand and Revenue  
  As we have seen, the number of skateboards you sell will be related to the price you charge.  The relationship between prices and the number of skateboards sold is called the Demand Curve.   The Demand Curve for your business is shown on the chart to the right. 

It is imprtant to understand this concept since it is a key driver in business and the economy as a whole. 		 
  A related  concept that is also very important is called "Revenue".  In the our case where our only income is derived from sales, Revenue is defined the total amount of income we receive when we sell a certain number of skateboards.  In our example this is equal to the Price we charge multiplied by the Number of Skateboards Sold.

For example, if we charged a Price of $300 for each skateboard, we would expect to sell 200 skateboards (how do we know this?),  we would have a Revenue of $60,000.
 
 
  It is important to note that we receive $0 in Revenue when we charge more than anyone is willing to pay and when we give away the skateboards for free.
  The amount of Revenue we receive is at a maximum value somewhere in between these two extremes.
 
  We will explore the effect of your Price on the Revenue you recieve on the next page.
    It's Your Business - Electric Skateboard Company
        
  Training: Price, Demand and Revenue  
SKTBDG05 Change the value of this slider to see what happens to sales and revenue.  
       
Target Price:
   
  Number of Skateboards Sold:    
  Revenue = NumberSold x Price:    
Use slider control (above) to find the revenue you would recieve at a price of $200:  
 
At what price would you have the highest value of revenue?  
   
How much revenue would you receive at this price?  
 
 
Choose the statement that is the best summary of the relation between price and revenue:    
     
 
In the game we are going to play as a class, your main objective will be maximize the Revenue you receive over the next two years.  
     
 
TRUE
 
labId
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Max Demand
500
Max Price
500
Price Base Demand D At Target Revenue Revenue at Target
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