The Acme Manufacturing Company asks a consultant if it
should lower its price. The consultant tells it that it
should not because consumers would not respond much to a
lower price. In this example, the:
consultant's statement is an example of a normative
consultant is suggesting that the
demand for the product is inelastic.
consultant believes that the
production of the product entails external
consultant is stating that the company
has limited liability.
consultant does not believe in the law
If demand elasticity is greater than one,
producing and selling one more unit of output