Asked by Matias Morales on Jul 21, 2024
Verified
During the height of the pet rock craze in the 1970s, the price elasticity of demand was estimated to be 1.20.Since pet rocks have a marginal cost of zero, a profit-maximizing seller of pet rocks would
A) increase prices.
B) decrease prices.
C) leave prices unchanged.
D) need more-detailed market information before making any pricing changes.
E) diversify into selling Karen Carpenter LPs.
Price Elasticity Of Demand
A measure in economics indicating how the quantity demanded of a good changes in response to a change in its price.
Marginal Cost
The increase in total cost that arises from an increase in the production of one additional unit of a good or service.
Profit-Maximizing Seller
A seller who adjusts prices and production levels to achieve the highest possible profit from their goods or services.
- Familiarize oneself with the strategy of boosting profits in diverse business landscapes.
- Recognize the significance of price elasticity of demand in pricing strategies.
Verified Answer
Learning Objectives
- Familiarize oneself with the strategy of boosting profits in diverse business landscapes.
- Recognize the significance of price elasticity of demand in pricing strategies.
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