Would a profit-maximizing firm sell where demand is inelastic?
A. No, this would not follow the rule of MC = MR.
B. No, the firm could not profitably raise price.
C. Yes, the firm could profitably lower price to attract sales.
D. Yes, in this case there are few substitutes for the good.
Answer: A
Economics
You might also like to view...
When price level is considered, the value of the multiplier will be less than that suggested by the oversimplified version of multiplier. Why?
Economics
Suppose that the value of the short-run absolute elasticity of demand for a good is 0.9. Then, we know the long-run absolute price elasticity of demand will be
A. less than 0.9. B. inelastic. C. greater than 0.9. D. 0.
Economics