If at the current level of product- specific service, consumers' value at $5 and the cost of retailers to provide the services is $10, which of the following is true?

Question

Quizplus · Accepted Answer

The cost of providing the services is greater than the value consumers place on them, which means that the current level of services is not at the profit-maximizing point. To maximize profits, retailers should reduce the level of services provided to a point where the marginal cost of providing the service equals the marginal benefit consumers receive from it. Therefore, the profit-maximizing level of services will be less than the current level.

If at the Current Level of Product- Specific Service, Consumers