Asked by
Blessley Thomas
on Oct 14, 2024
Verified
During the height of the pet rock craze in the 1970s, the price elasticity of demand was estimated to be 1.80.Since pet rocks have a marginal cost of zero, a profit-maximizing seller of pet rocks would
A) leave prices unchanged.
B) decrease prices.
C) increase prices.
D) need more-detailed market information before making any pricing changes.
E) diversify into selling Karen Carpenter LPs.
Price Elasticity Of Demand
A measure of how much the quantity demanded of a good responds to a change in its price, indicating its sensitivity.
Marginal Cost
The additional cost incurred from producing one more unit of a good or service.
Profit-Maximizing Seller
An economic agent whose primary objective is to achieve the highest possible profit from their sales.
- Learn about the theory of maximizing financial gain in assorted business circumstances.
- Comprehend the crucial role that price elasticity of demand plays in formulating pricing strategies.
Verified Answer
AS
Learning Objectives
- Learn about the theory of maximizing financial gain in assorted business circumstances.
- Comprehend the crucial role that price elasticity of demand plays in formulating pricing strategies.