Author Question: Refer to Figure 12-9. At price P3, the firm would A) lose an amount less than fixed cost. B) lose ... (Read 170 times)

ss2343

  • Hero Member
  • *****
  • Posts: 548
Refer to Figure 12-9. At price P3, the firm would
 
  A) lose an amount less than fixed cost. B) lose an amount more than fixed cost.
  C) break even. D) lose an amount equal to its fixed cost.

Question 2

Studies on consumer behavior have found that most people value fairness enough that they will refuse to participate in transactions they consider unfair, even if they are worse off as a result.
 
  How does this affect a firm's decision to raise prices in the event of a temporary increase in demand?


ebonylittles

  • Sr. Member
  • ****
  • Posts: 318
Answer to Question 1

C

Answer to Question 2

If the firm chooses to raise prices, consumers will consider this price increase unfair and might choose to buy elsewhere. This loss of consumer goodwill could lead to lower profits in the long run. It is rational for firms to forgo raising prices in the short run to keep customers happy. This can lead to increased profits in the long run.



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
 

Did you know?

The types of cancer that alpha interferons are used to treat include hairy cell leukemia, melanoma, follicular non-Hodgkin's lymphoma, and AIDS-related Kaposi's sarcoma.

Did you know?

For high blood pressure (hypertension), a new class of drug, called a vasopeptidase blocker (inhibitor), has been developed. It decreases blood pressure by simultaneously dilating the peripheral arteries and increasing the body's loss of salt.

Did you know?

According to animal studies, the typical American diet is damaging to the liver and may result in allergies, low energy, digestive problems, and a lack of ability to detoxify harmful substances.

Did you know?

A recent study has found that following a diet rich in berries may slow down the aging process of the brain. This diet apparently helps to keep dopamine levels much higher than are seen in normal individuals who do not eat berries as a regular part of their diet as they enter their later years.

Did you know?

If you could remove all of your skin, it would weigh up to 5 pounds.

For a complete list of videos, visit our video library