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A Company Currently Sells 60,000 Units a Month at $10

Question 50

Multiple Choice

A company currently sells 60,000 units a month at $10 per unit.The marginal cost is constant at $6 up to 100,000 units per month.The company is considering raising the price by 10% to $11.If the price elasticity of demand is constant and ______ in that price range then profits would increase if they raise the price to $11.


A) equal to -3.0
B) equal to -2.8
C) between -2.8 and -2.5
D) greater than or equal to -2.2
E) none of the above

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