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aabbccddee normal text box 1 the suggestion that a seller...

Question: aabbccddee normal text box 1 the suggestion that a seller...

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AaBbCcDdEe Normal Text Box 1) The suggestion that a seller will try to set price based on what the market will beris explicit recognition of the constraint imposed by: A) the firms marginal cost of production. B) the price elasticity of demand for that item. C) the firms competitors. D) the need for most firms to earn positive economic profits over time if they are to remain in 2) By and large, the price of each item on a restaurant menu is A) an accurate reflection of the items marginal cost. B) based strictly on consumer demand C) a function of cost and the price elasticity of demand for the item D) a fixed multiple of the items total cost is.referred to as: A) avcragc cost pricing. B) percentage pricing C) rate-of-return pricing. D) matkup pricing. 4) Which of the following statements is correct? A) To maximize profit, a firm should apply a uniform markup to each product it sells B) The profit-maximizing firms ability to mark up price over average cost is limited by the price elasticity of demand for the product in question. C) It is not possible to maximize profits by using a markup pricing strategy D) Using markup pricing is more complicated than simply setting price equal to marginal cost 5) Assume a change in price causes the price clasticity of demand for a good (in absolute valuc) and marginal revenue to decrease. In this case we can conclude that the price of the good was: A) incrcascd B) held constant c) decrcased D) cannot be determined Print Layout View Sec 1 Pages of 3Words: 476 of 605L 100% MacBook Pro

t Elements ts Tables Charts SmartArt Review Text Box 6) Assuming the demand curve is downward sloping, as price incice demand for a good (in absolute value) and marginal revense: A) increase B) stay the same. C) decrcass D) cannot be determined. 7) When the marginal revenue resulting from a decrease in price is negative, demand for product is A) clastic B) unit clastic. C) inclastic D) cannot be determined without more information 8) When demand is elastic, the marginal revenue resulting from a decrease in A) positive C) pegative D) cannot be determined without more information. 9) At the profit-maximizing level of output, the amount by which the firm can mark up pric A) inverscly related to the price elasticity of demand for item in question B) directly related to the price elasticity of demand for item in question. C) totally unrelated to the price elasticity of demand for item in question D) cqual to the ratio of the marginal and average costs of production. 10) Assume the price clasticity of demand for a product is 4. In this case, the firms optimal markup is (approximately): A) 400 percent B) 100 percent. C) 33 percent. D) 25 percent l! 2 of 3 Words: 476 of 60 L 100% Print Layout View :Sec 1 Pages: 2013 words: 476of 605 L 100% MacBook Pro

AaßbCcDdEe O. Normal Text Box BUAD 632 Reading Comprehension #4 11) Which of the following statements is correcr? The markup pricing rule that is derived from the rule for profit maximization enn be used as a substitute for detcrmining the profit-maximizing level of output by equating marginal revenue and marginal cost, B) It is reasonable to assume that a profit-maximizing firm will never m-te-.Ka-taste portion of its demand curve. C) The ability of a profit-maximizing firm to mark up price above ave age cost is una fifecied eH#FF un: the price elasticity of demand for the firms output. D) The markup factor and the price elasticity of demand are positively reiaied, ie, as the efasticity of demand increases, the markup factor that the profit-maximizing firm can marginal cost in setting price increases as well. Print Layout View Sec 1 Pages: 3 of 3 Words: 476 of 605L 100% MacBook Pro

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