You have overheard the following statements:

(a) ‘To maximise profit you need to sell your output at the highest price.’

(b) ‘Elasticity of demand deals with the extent to which costs increase as demand increases.’

(c) ‘Provided that the price is large enough to cover the marginal cost of production, the sale should be made.’

(d) ‘According to economic theory, profit is maximised where total cost equals total revenue.’

(e) ‘Price skimming is charging low prices for the output until you have a good share of the market and then putting up your prices.’

Required:

Comment critically on each of these statements, clearly explaining all technical terms.

AppendixLO1