Question

A person argues that a key element of a successful strategy is to find a way to keep your price as high as possible while keeping your costs low, and do it in a way that you cover the largest amount of customers in the short and long term. Please discuss in favor or against with a clear logic.

Answer 1

Answer : Firms always try to maximize it's profit. When the production cost is low and remaining the this low cost as constant if the firm raise the price level then profit level increase. Total revenue increase when the firm sell products more. Firm's selling increase more when the firm cover maximum customers. And covering maximum customers in short run and long run time period both is the best way to earn maximum profit in short run and long run time period both. The firm become successful when it earn maximum profit in both short run and long run time period. Now, if I raise the price level for my products by remaining the costs low and cover maximum customers in both short run and long run then I will earn maximum profit in both short run and long run time period. Thus I become successful by earning maximum profit in both short run and long run time period. Therefore, the given person's argument is true and I favor this argument.