By selling products in both retail stores and outlet stores, firms can increase their profits by charging ________ prices to consumers with a low price elasticity of demand and ________ prices to consumers with a higher price elasticity of demand
A) higher; lower B) lower; lower C) higher; higher D) lower; higher
A
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Is the following quote correct? "Here's the law of demand in a nutshell: The higher the price, the lower the demand."
A) Yes, it is totally correct. B) No. It would be correct if it were to also say "other things constant." C) No, because it confuses demand and quantity demanded. D) No, because the law of demand does not apply to nutshells.
Explain briefly the following concepts:
(a) Increasing returns to scale (b) Decreasing returns to scale (c) Constant returns to scale
What is one reason the federal government might "bail out" farmers in flood prone areas of the country?
A) Such flooding is not diversifiable and therefore only non-profit entities, such as the federal government, can cover the risks. B) Such flooding is diversifiable, but insurance company CEOs are more concerned with their stock-holder wealth than the well-being of farmers. C) Such flooding is diversifiable, but the market for such insurance policies cannot clear without the assistance of the International Community. D) Such flooding is known to happen on a regular basis and therefore there is no "risk" to be insured against.
The goal of managers is to manage resources in such a way
A) to make them worth as much as they would be in their next best use. B) to make them worth more than they would be in any other use. C) to cover the cost of capital. D) to cover all opportunity costs.