A profit-maximizing price rises to the point at which further:
A)increases will cause proportionate decreases in the number of units sold.
B)decreases will cause disproportionate decreases in the number of units sold.
C)increases will cause disproportionate decreases in the number of units sold.
D)increases will cause disproportionate increases in the number of units sold.

Question

Quizplus · Accepted Answer

When a profit-maximizing price reaches a point where further increases will cause disproportionate decreases in the number of units sold, it means that consumers are becoming less willing to buy the product at a higher price. Therefore, the maximum profit is reached when the price is set at the point where the increase in price leads to a less than proportional decrease in the number of units sold.

A Profit-Maximizing Price Rises to the Point at Which Further