High Markups on a Product Could Lead to Low Profits

question 71

Multiple Choice

High markups on a product could lead to low profits when

• A) competitors have higher markups.
• B) there are no substitutes.
• C) demand is inelastic.
• D) sales dip due to high prices.
• E) supply is inelastic.

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Definitions:

Quasi-contract

A quasi-contract is a legal concept where the court imposes a contract-like obligation on a party to prevent unjust enrichment, even though no actual agreement exists between the parties.

Promissory Estoppel

A legal principle that prevents a party from withdrawing a promise made when the other party has reasonably relied on that promise to their detriment.

Statute of Frauds

A legal principle requiring certain types of contracts to be in writing and signed to be enforceable.

Oral Contract

A verbal agreement between parties that is legally binding, though more difficult to enforce than written contracts due to the lack of physical evidence.