The price elasticity of demand for a rental home in Luxury Resorts in the summer is 1.40 and is 2.60 in the spring. If Luxury Resorts faces a constant marginal cost of $600 per home rental, what is the profit-maximizing peak-load price to charge in the summer?
A) $2,750 B) $2,100 C) $975 D) $1,250
B) $2,100
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The price elasticity of a vertical demand curve is always
A. infinitely large. B. zero. C. one. D. increasing as price increases.
Official data may overstate the extent of poverty because
a. poverty is a relative as opposed to an absolute concept. b. it does not add "in-kind" transfers to the incomes of the poor. c. it overstates the taxes paid by the poor. d. it overestimates the amount the poor earn in the "underground economy."
Following an anticapitalist coup, Freedonia forces all citizens to turn in and stop using all credit cards. What is the most likely effect of this on velocity?
a. It will decrease. b. It will increase. c. It will remain constant. d. Velocity is unrelated to credit cards.
The short run is a time period such that
a. the existing firms in the market do not have sufficient time to change the amounts of any of the inputs that they employ. b. the existing firms in the market do not have sufficient time to either increase or decrease their current rate of output. c. the existing firms in the market do not have sufficient time to increase the size of their existing plant or build a new factory. d. new firms may build plants and enter the industry.