Short Answer 
The increase in demand for the bike leads to higher sales volumes and revenue for the firm. Raising the price from $50 to $60 boosts profit margins, enhancing overall profitability even with stable sales turnover by effectively managing economic profit through revenue versus opportunity costs.
Step 1: Understand the Impact of Increased Demand
The surge in demand for the bike significantly influences the sales volume. When more consumers want the bike, the firm experiences an increase in the quantity sold. This higher demand creates opportunities for the company to capitalize on the situation, leading to an increase in their revenue.
Step 2: Analyze the Price Increase Effect
When the price of the bike rises from $50 to $60, the firm gains an extra $10 per unit sold. This price adjustment, combined with the increased demand, translates directly into higher profit margins. Even with a stable turnover, the additional revenue from each bike sold enhances the firm’s overall profitability.
Step 3: Evaluate Profit Metrics
To understand the firm’s economic profit, consider the revenue generated from bike sales against the opportunity costs of the inputs used. The key factors include:
- Firm revenue from bike sales
- Opportunity costs of resources utilized
- Price changes impacting overall profitability