Firms should raise the prices on their goods
A)If the demand for the product is elastic
B)If it acquires a firm selling a complement good
C)If it acquires a firm selling a substitute good
D)Both a and c

Question

Firms should raise the prices on their goods​
A)​If the demand for the product is elastic
B)If it acquires a firm selling a complement good
C)If it acquires a firm selling a substitute good
D)​Both a and c

Quizplus · Accepted Answer

When a firm acquires a firm selling a substitute good, it can raise prices because consumers have fewer alternative products to switch to, reducing the price sensitivity (elasticity) of demand for its goods.

Firms Should Raise the Prices on Their Goods​

Firms Should Raise the Prices on Their Goods