During the Height of the Pet Rock Craze in the 1970s

question 46

Multiple Choice

During the height of the pet rock craze in the 1970s, the price elasticity of demand was estimated to be 1.20.Since pet rocks have a marginal cost of zero, a profit-maximizing seller of pet rocks would

• A)leave prices unchanged.
• B)need more-detailed market information before making any pricing changes.
• C)decrease prices.
• D)increase prices.
• E)diversify into selling Karen Carpenter LPs.

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Definitions:

Customer Value

The perception of worth that a product or service has in the mind of the consumer, often influencing their buying decisions.

Internal Accounting Systems

The set of procedures and records that a company's management uses for financial planning, analysis, and decision making within the company.

Dysfunctional Results

Outcomes of processes or activities that negatively affect the goals or functioning of an organization.

External Failure Cost

Costs incurred when a defective product or service is discovered after delivery to the customer, including returns, repairs, and lost sales.