The price elasticity of demand for Rosie's Roses fresh flowers the week of Valentine's Day is 1.40 and is 2.25 other days of the year. If Rosie's Roses faces a constant marginal cost of $2 per rose, what is the profit-maximizing off-peak load price to charge on days not on the week of Valentine's Day?
A) $7.00 B) $5.80 C) $2.50 D) $3.60
D) $3.60
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A positive externality exists when
A. marginal social costs are less than marginal private costs. B. marginal social costs are greater than marginal private costs. C. marginal social benefits are less than marginal private benefits. D. marginal social benefits are greater than marginal private benefits. E. a and d
A person who practices poisonous snake charming and does not reveal this to her health insurance company before purchasing insurance is an example of
A) moral hazard. B) adverse selection. C) signaling. D) screening.
The cost of complying with regulation
A) shifts the ATC curve upward. B) shifts the MC curve downward. C) shifts the demand curve to the right. D) increases the products' price elasticity of demand.
A firm recently doubled in size and experienced a reduction in the average total cost of production, as it was able to spread its fixed costs over a larger quantity of output. Which of the following should be the correct strategy of the firm after expansion? a. The firm should continue to grow slowly to see if sustained growth leads to greater economies of scale. b. The firm should continue to
grow rapidly to see if rapid growth leads to greater economies of scale. c. The firm should continue to grow exponentially to see if exponential growth leads to greater economies of scale. d. The firm should sell off portions of the business to profit from the economies of scale already received.