Answer:
Demand would have to drop by 27,500 units and above
Explanation:
<em>With a proposed increase in price of 10%, Calypso would like break-even, that to ensure that its total revenue covers its total fixed costs. . This would mean the minimum quantity should be that which will produce a total contribution that covers the total fixed cost. And would produce a profit of zero.</em>
<em>New selling price after 10% Increase = 110% × $30 =</em><em> $33</em>
Minimum quantity = Total fixed / contribution per unit
<em>Contribution per unit = selling price - variable cost per unit</em>
= $33 - $25
= $8 per unit
<em>Minimum quantity = Total fixed cost/contribution per unit</em>
= 180,000/ 8
= 22,500 units
<em>The decrease in demand = Current quantity - minimum quantity</em>
= 50,000 - 22,500
= 27,500 units
Demand would have to drop by 27,500 units and above