A small bakery produces custom cakes. Recently, they noticed that for every additional cake produced, their marginal cost increases due to overtime labor and higher ingredient prices. They decide to raise their prices in order to maximize total revenue. If they find that their total revenue actually decreases after the price increase, which of the following explanations is most likely correct?

When the bakery raised their prices, they might have made their cakes too expensive for some customers, leading to fewer sales. This situation often happens when the price increase is higher than what customers are willing to pay. Even though the bakery aimed to cover their rising costs, they may have lost more customers than expected, which reduced their overall revenue. For example, if a cake originally sold for $20 and they raised it to $30, some customers might decide not to buy at all, resulting in fewer total sales. Therefore, the decrease in total revenue suggests the price increase was too steep for their market.