Question

You are a business consultant in a remote and isolated small town. Two customers, a dentist and a portrait artist, came to you to ask for advice. They are considering to raise the price of their service to increase revenue. Write a short report for each of them using your economic training. How would your report be different if all these happened in the context of a great metropolitan area?

Answer 1

Specifically since the dentist and artist are from an isolated region, it is advisable to raise prices of their services. The point is because they are isolated and we can think that they are some sort of monopolies. They have greater control over prices than a metropolitan area. But it is important for them to consider demand of their services. As a dentist, demand is likely to be inelastic due to its sheer importance, but as an artist, the services is likely to be snobbish. Hence both should go for a rise.