A busy country store is the only producer and distributor of maple sausages in New Hampshire. It calculates that if it sets MR = MC, it will sell 2,000 sausages at a price of $10 and make a total economic profit of $6,000 . Instead, the store decides to charge a price of $8 . We can infer that the store

a. is lowering the price so that it can earn more than $6,000 total profit
b. is operating in a contestable market so it is pricing the sausages to keep out competition
c. will now sell fewer sausages according to the law of demand
d. is now operating at a loss of $1 per sausage
e. hopes that its demand is inelastic so that total revenue will increase


B

Economics

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