A profit maximization pricing objective
A)will help a firm to earn "all the traffic will bear."
B)requires some knowledge of the firm's demand curve to be implemented effectively.
C)with no competitors and an inelastic demand curve is likely to lead to "high" prices in the short run.
D)may lead to a low penetration price.
E)All these answers are correct.

Question

Quizplus · Accepted Answer

A profit maximization objective seeks to earn "all the traffic will bear." If there are no competitors and the demand curve is inelastic,then profit maximization leads to high prices in the short run.But pricing to achieve profit maximization doesn't always lead to high prices.If the whole demand curve is fairly elastic,then penetration pricing may be better.There,the firm tries to sell the whole market at one low price.

A Profit Maximization Pricing Objective