Which combination of demand and supply curves would be appropriate for a firm attempting to increase its profits by increasing its market share?
A、Inelastic demand, inelastic supply
B、Elastic demand, elastic supply
C、Inelastic demand, elastic supply
D、Elastic demand, inelastic supply
A、Inelastic demand, inelastic supply
B、Elastic demand, elastic supply
C、Inelastic demand, elastic supply
D、Elastic demand, inelastic supply
【参考答案及解析】
Rationale: To increase market share requires greater quantities of the firm's products to be both demanded and supplied. To sell more, a firm needs to lower price. For this to be profitable, demand must be elastic. To produce more, supply must also be elastic.
Rationale: To increase market share requires greater quantities of the firm's products to be both demanded and supplied. To sell more, a firm needs to lower price. For this to be profitable, demand must be elastic. To produce more, supply must also be elastic.