Suppose your manufacturing firm is not a price-taking seller (i.e., has some control over your product price) and sells machinery to U.S. (domestic) buyers as well as foreign buyers
The domestic demand for your product is inelastic but the foreign demand is elastic, and the machinery is bulky so that the high transport costs prevent resale among the buyers. You could charge both groups of buyers the same price for the machinery, but you know that you could increase total sales revenue by charging the domestic buyers a ________ price and charging the foreign customers a ________ price. A) higher, higher
B) higher, lower
C) lower, higher
D) lower, lower
B
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What makes the demand for some goods elastic and the demand for other goods inelastic?
What will be an ideal response?
Refer to Table 4-3. The table above lists the marginal cost of cowboy hats by The Waco Kid, a firm that specializes in producing western wear. If the price of cowboy hats decreases from $38 to $30
A) consumer surplus will rise by $6. B) the marginal cost of producing the third cowboy hat will fall to $30. C) producer surplus will rise from $8 to $24. D) producer surplus will fall from $22 to $6.