For the first time in two years, Big G (the cereal division of General Mills) raised cereal prices by 4 percent.
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Given this information, is it surprising that the company’s revenue increased when it decreased the average selling price of its phones? Explain.

Revenue at a major smart-phone manufacturer was $2.3 billion for the nine months ending March 2, up 85 percent over revenues for the same period last year. Management attributes the increase in revenues to a 108 percent increase in shipments, despite a 21 percent drop in the average blended selling price of its line of phones. Given this information, is it surprising that the company’s revenue increased when it decreased the average selling price of its phones? Explain.

 

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