Inkeo Company Recently Changed the Selling Price of One of Its

question 56

Multiple Choice

Inkeo Company recently changed the selling price of one of its products. Data concerning sales for comparable periods before and after the price change are presented below. $$\begin{array} { c c } \text { Selling Price } & \text { Unit Sales } \\\$ 12.00 & 4,300 \\\$ 11.00 & 5,030\end{array}$$ The product's variable cost is $12.70 per unit. According to the formula in the text, the product's profit-maximizing price is closest to:

• A)$28.87
• B)$28.53
• C)$15.91
• D)$29.91

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Definitions:

Aggregate Demand

The sum of desires for all goods and services in an economy, noted at a fixed wide-ranging price level over a predetermined period.

Stock-market Boom

A time marked by swift and considerable growth in stock market prices, typically mirroring positive economic expectations.

Crowding-out Effect

A situation where increased government spending leads to a reduction in private sector spending, either through higher taxes, higher interest rates, or borrowing.

Crowding-out Effect

A situation where increased government spending leads to a reduction in private sector investment.