Suppose That an Increase in the Price of Melons from $1.30

question 76

Multiple Choice

Suppose that an increase in the price of melons from $1.30 to $1.80 per pound increases the quantity of melons that melon farmers produce from 1.2 million pounds to 1.6 million pounds.Using the midpoint method,what is the approximate value of the price elasticity of supply?

• A)0.67
• B)0.89
• C)1.00
• D)1.13

Recognize legal, political, and environmental considerations in pricing decisions.

Apply cost-plus pricing formulas to determine product prices.

Understand the application and implications of the profit maximising model.

Learn the concepts of price elasticity and its impact on pricing strategies.

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Definitions:

Acquired Needs Theory

A motivational model that posits individuals are driven by acquired needs, such as the need for achievement, power, and affiliation.

Achievement

The successful completion of tasks or attainment of goals through effort, skill, or courage, often recognized and rewarded.

Expectancy Theory

Expectancy theory is a motivational theory that suggests an individual's behavior is determined by their expected outcomes, based on their beliefs about effort-performance relationships, and the desirability of these outcomes.

Performance-reward Relationships

The correlation between the level of performance and the reward received, highlighting the principle that higher performance should lead to greater rewards.