In a market characterized by a single seller and many buyers, will a seller's initiative to improve the quality of its product at a higher cost of production be profitable?
The success of the strategy will depend on the relationship between changes in the cost of production and changes in the buyer's valuation. If the increase in the cost of production is lower compared to the increase in the buyer's valuation, the strategy will be profitable. However, if the increase in the buyer's valuation of the improved good is lower than the increase in the cost of production then the strategy will prove to be unprofitable.
You might also like to view...
If the price of inputs falls and the level of consumer indebtedness rises:
a. Aggregate demand rises, and aggregate supply falls. b. Aggregate demand rises, but aggregate supply does not change. c. Aggregate demand falls, and aggregate supply rises. d. Aggregate demand and aggregate supply rise. e. Aggregate demand and aggregate supply fall.
Explain the policy implications of the classical economists' beliefs
Employees who are members of a labor union can expect to receive lower wages than nonunion workers in the same industry, but can also expect greater job security.
Answer the following statement true (T) or false (F)
An individual should specialize in the production of a good for which he/she has a
A. conditional advantage. B. general advantage. C. comparative advantage. D. determined advantage.