High markups on a product could lead to low profits when
A) competitors have higher markups.
B) there are no substitutes.
C) demand is inelastic.
D) sales dip due to high prices.
E) supply is inelastic.

Question

Quizplus · Accepted Answer

High markups may lead to low profits if sales decrease due to high prices. This is because even though the profit per unit may be high, the overall number of units sold may decrease, leading to a lower total profit.

High Markups on a Product Could Lead to Low Profits