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Exercise

Drawing Conclusions from Experiments

The transportation network company, Unter Technologies, is interested in increasing its revenue. Its CEO hypothesizes that the firm would generate substantially greater profits if it lowered its per-ride costs and profit margins.

Unter conducts an experiment on how its sales are sensitive to price reductions by offering a 25% discount for all of its services for one day. To their pleasant surprise, Unter sees a huge spike in sales and profits during the promotional day.

Seeing the results of this experiment, Unter's CEO decides that Unter should lower its prices permanently. Why might this conclusion be a bit hasty?

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50 XP
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