At the profit-maximizing level of output, the amount by which the firm can mark up price is: Group of answer choices directly related to the price elasticity of demand for item in question. totally unrelated to the price elasticity of demand for item in question. equal to the ratio of the marginal and average costs of production. inversely related to the price elasticity of demand for item in question.

inversely related to the price elasticity of demand for item in question.

Explanation:

Price can be defined as the amount of money that is required to be paid by a buyer (customer) to a seller (producer) in order to acquire goods and services. Thus, it refers to the amount of money a customer or consumer buying goods and services are willing to pay for the goods and services being offered. Also, the price of goods and services are primarily being set by the seller or service provider.

Generally, all businesses and entrepreneurship go into the business of buying and selling or providing services to service takers (consumers) for the sole purpose of making profit and maximizing the profits over time.

At the profit-maximizing level of output, the amount by which a business firm can mark up price is inversely related or proportional to the price elasticity of demand for the item (product) in question. Thus, the amount by which a business firm can mark up price increases as the price elasticity of demand for a item (product) decreases and vice-versa.

A price elasticity of demand can be defined as a measure of the responsiveness of the quantity of a product demanded with respect to a change in price of the product, all things being equal.

Also, a mark-up price is simply the difference between the cost price of a good (product) or service and its selling price.