Seeking a profit maximization pricing objective:
A) will help a firm to earn "all the traffic will bear."
B) requires some knowledge of the firm's demand curve to be implemented effectively.
C) with no competitors and an inelastic demand curve is likely to lead to "high" prices in the short run.
D) may lead to a low penetration price.
E) All of these alternatives are correct.

Question

Quizplus · Accepted Answer

All the statements correctly describe aspects of seeking a profit maximization pricing objective. A) refers to setting prices as high as possible without losing customers, B) acknowledges the need to understand how quantity demanded varies with price, C) explains that a monopoly (no competitors) with inelastic demand can set high prices, and D) mentions that aiming for market penetration might involve setting lower prices initially to attract customers.

Seeking a Profit Maximization Pricing Objective