Answer to Question #62071 in Microeconomics for Benjamin Logan

Question

The Dubai Gold Souk consists of over 300 stores in a specific area that all sell jewellery. The products sold by each store are identical.

1.The price for each product in the stores is determined in part by market demand.

2.To maximise profit or to minimise losses, a store should determine what quantity to produce using the rule P=MC.

3.Demand in this market is perfectly elastic.

Which of the following statements are true:
Only 1 is true.
Only 2 is true.
Both 1 and 2 are true.
Both 2 and 3 are true.
All three are true.

Answer 1

Both 2 and 3 are true.