Restaurants and retail stores often give 10% senior citizen discounts. Use the concept of elasticity to explain how this can be profit-maximizing behavior.
What will be an ideal response?
Senior citizens living on a low income and with more leisure time may have more price elastic demand than people who are still working. By lowering prices to people who have higher elasticity the restaurants and retail stores may actually be increasing their profits.
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What is a fractional reserve system?
Entry of new firms will occur in a monopolistically competitive industry until
a. marginal cost equals zero b. marginal revenue equals zero c. marginal revenue equals marginal cost d. economic profit equals zero e. economic profit is negative
A country's rate of real GDP growth is 3% per year. Its population is growing 4% per year. At what rate is its real GDP per capita changing?
A. Real GDP per capita is increasing by 0.75%. B. Real GDP per capita is increasing by 7%. C. Real GDP per capita is decreasing by 1.33%. D. Real GDP per capita is decreasing by 1%.
In economics we assume that the goal of a firm is to
A) minimize costs. B) maximize revenue. C) maximize economic profits. D) maximize total sales.