Question
To increase a company's profit, a manager suggests that the company needs to increase the value of its product to customers. Suppose, per the manager's
To increase a company's profit, a manager suggests that the company needs to increase the value of its product to customers.
Suppose, per the manager's advice, the company successfully increases the value of its product to its customers. At the same time, however, the price and cost per unit of the good both increase by the same amount.
Indicate whether profit per unit will increase, decrease, or stay the same (no change).
Hint: Think about the allocation of economic value for a product between cost, profit, and consumer surplus.
Profit per Unit will it Increase, Decrease, or No Change?
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