A Marketing Manager Has Just Estimated That Her Firm's Marginal

question 110

Multiple Choice

A marketing manager has just estimated that her firm's marginal revenue will become negative if a proposed price cut is made. This means that:

• A) demand must be very elastic.
• B) marginal cost must be negative already.
• C) the firm is in pure competition.
• D) more units may be sold-but total revenue will be less than it would be at the higher price.
• E) None of these-a firm's marginal revenue can't be negative.

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Definitions:

Incremental Value

The additional value created by undertaking a specific action, project, or investment, compared to not doing so.

Shares Outstanding

The total number of shares that are currently owned by shareholders, including restricted shares owned by the company's officers and insiders as well as those held by the public.

Market Price

The market price at which you can currently buy or sell an asset or service.

Cash Deal

A transaction where the payment for a good, service, or acquisition is made entirely with cash instead of financing or stock exchanges.