You Have Just Been Hired as a Business Consultant to Determine

question 31

Multiple Choice

You have just been hired as a business consultant to determine what pricing policy would be appropriate in order to increase the total revenue of a major shoe store.The first step you would take would be to

• A) increase the price of every shoe in the store.
• B) look for ways to cut costs and increase profit for the store.
• C) determine the price elasticity of demand for the store's products.
• D) determine the price elasticity of supply for the store's products.

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Definitions:

Scarce Resources

Natural, human, and capital resources that are limited in supply and can be used for the production of goods and services.

Bowed Outward

Refers to the shape of a production possibility frontier that indicates increasing opportunity costs for producing two goods.

Opportunity Cost

The cost of foregone alternatives; the value of the best alternative given up when a decision is made to choose one option over another.

Production Possibilities Frontier

A curve depicting all maximum output possibilities for two goods, given a set of inputs, representing the trade-off between different choices in the allocation of resources.