If a profit-oriented marketing manager doesn't know the exact shape of the firm's demand curve, marginal analysis:
A) is useless.
B) may be useful anyway--because a profitable region usually surrounds the best price.
C) will suggest the same price as break-even analysis.
D) suggests that the only sensible approach is to follow the price leader.
E) None of the above is true.

Question

Quizplus · Accepted Answer

Even without knowing the exact shape of the demand curve, marginal analysis can still be useful because there is usually a profitable range of prices that surrounds the best price. By analyzing the marginal revenue and marginal cost at different price points, the marketing manager can narrow down the range of profitable prices and make an informed decision on a pricing strategy.

If a Profit-Oriented Marketing Manager Doesn't Know the Exact Shape