Tony, a lone craftsman, makes ruby jewelry and currently sells for $300 per piec

Question

Tony, a lone   craftsman, makes ruby jewelry and currently sells for $300 per piece. He does   not know whether or not consumers would be willing to pay even more. The   minimum acceptable price to Tony is $150. Based on this information, which of   the following is true?

A)

Tony should stop   selling ruby jewelry.

B)

Tony cannot possibly   receive a higher price.

C)

Tony

Tony, a lone   craftsman, makes ruby jewelry and currently sells for $300 per piece. He does   not know whether or not consumers would be willing to pay even more. The   minimum acceptable price to Tony is $150. Based on this information, which of   the following is true?

A)

Tony should stop   selling ruby jewelry.

B)

Tony cannot possibly   receive a higher price.

C)

Tony

Explanation / Answer

C Tony's supply is relatively elastic as he has more room to lower his price or sell fewer pieces if his demand for his jewelry decreases.

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