To determine the fastest rate at which the price could drop before the monthly revenue starts to drop, we need to analyze the relationship between price, quantity sold, and revenue. Given: - Price per boat: $55,000 - Quantity sold per month: 40 boats - Increase in demand per month: 4 boats - Revenue formula: Revenue = Price × Quantity 1. Calculate the initial monthly revenue: - Initial quantity sold = 40 boats - Initial revenue = $55,000 (price per boat) × 40 (quantity sold) = $2,200,000 2. Determine the threshold for the price drop before revenue starts to decrease: - To maintain revenue at $2,200,000 with a lower price, we need to adjust the quantity sold accordingly. - If the price drops by $X per boat, the quantity sold should increase by X/55,000 boats to maintain revenue. 3. Find the maximum price drop per boat before monthly revenue starts to drop: - Let's assume the price drops by $X per boat. - New Price = $55,000 - X - New Quantity = 40 + (X/55,000) (to maintain revenue at $2,200,000) - New Revenue = (55,000 - X) × (40 + (X/55,000)) 4. To find the threshold where revenue starts to drop, we set up an equation: - Set New Revenue equal to the initial revenue ($2,200,000) and solve for X: (55,000 - X) × (40 + (X/55,000)) = 2,200,000 5. Solve the equation to find the maximum price drop: - By solving the equation, you can determine the maximum amount by which the price can drop per month before the monthly revenue starts to drop. This analysis will help you identify the fastest rate at which the price could drop without negatively impacting the monthly revenue.