During the Height of the Pet Rock Craze in the 1970s

question 46

Multiple Choice

During the height of the pet rock craze in the 1970s, the price elasticity of demand was estimated to be 1.20.Since pet rocks have a marginal cost of zero, a profit-maximizing seller of pet rocks would

• A)leave prices unchanged.
• B)need more-detailed market information before making any pricing changes.
• C)decrease prices.
• D)increase prices.
• E)diversify into selling Karen Carpenter LPs.

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