Suppose a Producer Is Able to Separate Customers into Two

question 63

Multiple Choice

Suppose a producer is able to separate customers into two groups,one having an inelastic demand and the other having an elastic demand.If the producer's objective is to increase total revenue,she should

• A) increase the price charged to customers with the elastic demand and decrease the price charged to customers with the inelastic demand.
• B) decrease the price charged to customers with the elastic demand and increase the price charged to customers with the inelastic demand.
• C) decrease the price to both groups of customers.
• D) increase the price for both groups of customers.

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Definitions:

Manufacturing Activity

The process of converting raw materials into finished products through various stages such as assembly, machining, or processing.

Materials

The physical components used in the production of goods, ranging from raw materials to parts and packaging.

Assembly Department

A section within a manufacturing facility where components are assembled into finished products, an essential part of the production process.

First-In, First-Out Method

An inventory valuation method that assumes the first items acquired are the first ones sold, which is often used to calculate cost of goods sold.