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Exercise

Generalizing Experimental Results

Unter's CEO is still convinced that lowering the prices of their services might increase the company's profits. He is hesitant to lower Unter's prices for a longer period, since the company would risk losing a great deal of income if the price-drop did not substantially increase revenue.

Therefore, to understand how a long-term price drop would affect Unter's profits, the CEO of Unter decides to drop the prices of their services in one city. Over the course of a year, Unter's profits in that city rose substantially. Unter's CEO is now convinced that he should drop Unter's prices nation-wide. Why might this conclusion still be too hasty?

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50 XP
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