What can price tell a business owner in terms of decisions that must be made?  (See below)Price can help the business owner answer all but which of the following: A. How should we produce our...

What can price tell a business owner in terms of decisions that must be made?  (See below)

Price can help the business owner answer all but which of the following:

A. How should we produce our goods or services?
B. What goods or services should we produce?
C. For whom should we produce our goods or services?
D. When will our goods and services become profitable?

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pohnpei397's profile pic

pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted on

I assume that you are talking about the price at which the business's good or service can be sold.  If so, the best answer for this is A.

The price that your firm gets for a good or service does not affect how you should produce it.  You should always produce it at the lowest possible price (for a given quality of good or service).  That way, you will make the most possible profit no matter what your selling price is.

The others can be determined by price -- you produce the goods or services whose prices are highest (compared to production costs).  You produce for the people who can afford to pay the prices.  The goods and services will become profitable when the price is high enough.  All of these depend some on the price while A does not.

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