Once a book has been written, would an author facing an inelastic demand curve for the book prefer to raise or lower the book's price? Why?
A. The author would raise or lower the price. Because the author's cost is a sunk cost, any increase or decrease in price will increase revenue and profit.
B. The author would prefer to raise the book's price. Raising prices when demand is inelastic increases revenue. Because the author's cost is a sunk cost, profit also rises.
C. The author would prefer to lower the book's price. Lowering prices when demand is inelastic increases revenue. Because the author's cost is a sunk cost, profit also rises.
D. The author would not change the price. Because the author's cost is a sunk cost, any change in price will decrease revenue and profit.
References
Ans: B. The author would prefer to raise the book's price. Raising prices when demand is inelastic increases revenue. Because the author's cost is a sunk cost, profit also rises
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A) $40 million. B) $90 million. C) $115 million. D) $120 million. E) $125 million.
According to the efficient markets theory of stock prices, who are the primary beneficiaries of a sudden rise in demand for a firm's stock?
a. the consumers of the firm's products b. the current shareholders at the time of the rise in demand c. the investors who buy the firm's stock shortly after the rise in demand d. the investors who sell their shares just before the rise in demand e. the investors who have been carefully watching stock price patterns