Would a Profit-Maximizing Firm Sell Where Demand Is Inelastic

question 62

Multiple Choice

Would a profit-maximizing firm sell where demand is inelastic?

• A)No, this would not follow the rule of MC = MR.
• B)No, the firm could not profitably raise price.
• C)Yes, the firm could profitably lower price to attract sales.
• D)Yes, in this case there are few substitutes for the good.

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Definitions:

Political Economy

A branch of social science that studies the relationships between individuals, societies, and governments, focusing on the production, distribution, and consumption of goods and services.

Globalization

The process by which businesses, cultures, and economies become interconnected and interdependent through global networks of trade, communication, and transportation.

Structures

denote the organized arrangement or system of interrelated elements, which could be social, physical, or conceptual.

Institutions

Complex social structures and organizations that govern the behavior of individuals within a society, such as family, education, and government.