Under which of the following situations would a seller prefer to incur the cost of improving the product quality?
a. If the increase in buyer's valuation for the improved product is higher than the cost of improving it.
b. If the increase in the seller's opportunity cost of improving the product is higher than the price of the product.
c. If the product improvement lowers the producer surplus.
d. If the product improvement allows the seller to a break even.
A
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Refer to the above figure. At a price of $2 per gallon, the quantity demanded of gasoline is
A) 80,000 gallons per month. B) 100,000 gallons per month. C) 60,000 gallons per month. D) 140,000 gallons per month.
If production of a good creates external benefits, a competitive market will likely produce
a. less output than would maximize profit. b. more output than would maximize profit. c. less output than is efficient. d. more output than is efficient.