Using the linear approximation system to estimate the profit maximizing price requires that managers have information on the cost of production
A)and the nature of the production function.
B)the total population and the percentage of people in labor force.
C)the current price,the current quantity sold,and changes in price and quantity.
D)and the decision-making process of the marketplace.

Question

Quizplus · Accepted Answer

The linear approximation system to estimate the profit-maximizing price requires information on the current price, the current quantity sold, and how changes in price affect changes in quantity (price elasticity of demand), which are directly related to understanding the demand side of the equation rather than the cost of production or broader economic indicators.

Using the Linear Approximation System to Estimate the Profit Maximizing