Please diagram the revenue and profit situation (which would also include the cost curves) for a producer of a highly elastic (but not perfectly elastic) good of your choice (a restaurant, boutique clothing store, etc.). Under what circumstances would it make sense for them to raise their price? While profit maximization is the main goal for most firms (and one which you should be able to represent on a diagram), you may wish to consider alternative goals depending upon the business you have chosen.

Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter24: Price-searcher Markets With High Entry Barriers
Section: Chapter Questions
Problem 13CQ
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Please diagram the revenue and profit situation (which would also include the cost curves) for a producer of a highly elastic (but not perfectly elastic) good of your choice (a restaurant, boutique clothing store, etc.). Under what circumstances would it make sense for them to raise their price?


While profit maximization is the main goal for most firms (and one which you should be able to represent on a diagram), you may wish to consider alternative goals depending upon the business you have chosen.

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