You Currently Sell the Same Product to Both Students and Faculty

question 92

Multiple Choice

You currently sell the same product to both students and faculty members, and are able to prevent transfer from one group to the other. Your current prices, quantities sold, and the absolute values of the slopes of the demand curves are as follows: Price Number sold Slope of demand curve Students $5 200 0.01
Faculty $10 30 0.40
If your marginal cost is $1 and you are interested in maximizing your revenues, how would you adjust your prices?

• A)Increase prices for both groups.
• B)Decrease prices for both groups.
• C)Increase student price and decrease faculty price.
• D)Decrease student price and increase faculty price.

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Definitions:

Cognitive Labeling

The process of identifying and interpreting feelings and emotions by attaching labels to them.

Cognitive-Mediational Theory

Theory of emotion in which a stimulus must be interpreted (appraised) by a person in order to result in a physical response and an emotional reaction.

Emotional Experience

The feelings or reactions to an event that are subjective and can range broadly, including happiness, sadness, anger, or fear.

Interpretation

The act of explaining the meaning of something or presenting one's understanding of a text, concept, or situation.