Firms that face capacity constraints can only increase output only up to the capacity, but no further. Therefore, firms
a. Should price to capacity as long as MR > MC
b. Should price to capacity as long as MR = MC
c. Should price to capacity as long as MR < MC
d. Should not take capacity into consideration in pricing decisions
a
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Suppose the price of a ticket to a Lenny Kravitz concert is $41 and at that price, the quantity of tickets demanded is 17,000 per concert
Using the midpoint method of calculating percentage changes, if Mr. Kravitz raises the price to $48 and the quantity demanded decreases to 16,000, the price elasticity of demand for his concert tickets is A) 15.73. B) 6.06. C) 1.00. D) 0.39. E) 0.93.
If a price ceiling on coffee is set above the market-clearing price, then
A) the quantity of coffee demanded will decrease. B) the quantity of coffee supplied will increase. C) the quantity demanded for coffee will increase. D) all of the above will occur. E) none of the above will occur.