Marketing Final Exam

Lanover manufacturing supplies windshield wiper

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Unformatted text preview: 11 Thinking KEY: CB&E Model Customer OBJ: 07-6 TOP: AACSB Reflective MSC: BLOOMS Application 43. When demand for a product is _____, an increase or decrease in the price of the product will not significantly affect demand for the product. a. responsive b. elastic c. inelastic d. derived e. bundled ANS: C This is the definition of inelastic demand. PTS: 1 REF: 110 Thinking KEY: CB&E Model Customer OBJ: 07-6 TOP: AACSB Reflective MSC: BLOOMS Knowledge 44. Lanover Manufacturing supplies windshield wiper blades to General Motors and Ford. A sudden jump in the price of rubber and its substitutes has forced Lanover and other wiper blades manufacturers to double the price of the blades. This increase in price has not affected sales volume for wiper blades. The price change did not change demand for the blades because demand for this product by business customers is: a. inelastic b. secure c. bundled d. elastic e. resistant ANS: A A change in price has not really made a change in quantity demanded; therefore, the good is price inelastic. PTS: 1 REF: 111 Thinking KEY: CB&E Model Customer OBJ: 07-6 TOP: AACSB Reflective MSC: BLOOMS Application 45. Due to rapidly rising overhead costs and increases in raw material prices, Framarx Corporation was forced to raise the price of its waxed and coated paper by 35 percent. (The paper is used between frozen hamburger patties to keep the patties from freezing together.) Framarx is the leading manufacturer in this industry, and its competitors will follow suit. While the sales force for Framarx believes the price increase will result in a drop in sales, its marketing manager disagrees because the demand for the waxed and coated paper is more than likely: a. resistant b. inelastic c. derived d. elastic e. bundled ANS: B A good is price inelastic if a change in price causes little or no change in demand. Paper used between hamburger patties is a fairly insignificant cost item and might even be considered a necessity item. PTS: 1 REF: 111 Thinking KEY: CB&E Model Customer OBJ: 07-6 TOP: AACSB Reflective MSC: BLOOMS Application 46. During the first years of this century, the number of packages arriving at households has more than doubled. An increase in the price of the cardboard boxes in which these packages are shipped will have little effect on the amount of shipping done; the demand for the boxes will continue to increase. Therefore, you know the demand for the cardboard boxes is: a. resistant b. inelastic c. derived d. elastic e. bundled ANS: B A product is price inelastic if a change in price causes little or no change in demand. Boxes are a fairly insignificant cost item in the overall costs of a product and might even be considered a necessity item. PTS: 1 REF: 111 Thinking KEY: CB&E Model Customer OBJ: 07-6 TOP: AACSB Reflective MSC: BLOOMS Application 47. Although the price of a chemical added to paint to protect surfaces from mold and mildew has almost doubled, the price of paint has risen an average...
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