Anon Corporation is a manufacturer of Widgets. Faced with increasing input material costs, the company is contemplating a price increase in the range of 15-20 percent. There are significant disagreements among senior personnel in the company about this move. Which of the following, if true, would strengthen the argument in favor of a price increase?
A) Substitutes for Widgets are available in the market.
B) The price of materials consumed along with Widgets has gone up.
C) A change in the environment is likely to stimulate overall demand for Widgets.
D) Competitors have announced that they intend to keep prices at current levels.
E) Relaxation of import restrictions would lead to foreign competitors flooding the market.

Question

Quizplus · Accepted Answer

If a change in the environment is likely to stimulate overall demand for Widgets, it would support a price increase as the company could capitalize on the increased demand despite higher prices.

Anon Corporation Is a Manufacturer of Widgets