A Company Currently Sells 60,000 Units a Month at $10

question 136

Multiple Choice

A company currently sells 60,000 units a month at $10 per unit.The marginal cost is constant at $6 up to 100,000 units per month.The company is considering raising the price by 10% to $11.If the price elasticity of demand is constant and ______ in that price range then profits would increase if they raise the price to $11.

• A)equal to -3.0
• B)equal to -2.8
• C)between -2.8 and -2.5
• D)greater than or equal to -2.2
• E)none of the above

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