Marketing Final Exam

Total revenue therefore when apple decreased the

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Unformatted text preview: stic e. elastic ANS: E If demand is elastic, an increase in price will decrease demand by a larger amount, reducing total revenue, therefore, when Apple decreased the price, demand increased, increasing total revenue. PTS: 1 REF: 307 Thinking KEY: CB&E Model Pricing 42. What happens when demand is elastic? a. b. c. d. e. OBJ: 19-3 TOP: AACSB Reflective MSC: BLOOMS Application As price goes up, revenue goes down. As price goes down, revenue goes down. As price goes up, revenue goes up. As price goes up, revenue does not change. As price goes down, revenue does not change. ANS: A If demand is elastic, an increase in price will decrease demand by a larger amount, reducing total revenue PTS: 1 REF: 307 Thinking KEY: CB&E Model Pricing OBJ: 19-3 TOP: AACSB Reflective MSC: BLOOMS Comprehension 43. Procter & Gamble dropped the price of Pringles Potato Chips in the Southeast due to price competition and consumer demand. As a result of the price reduction, P&G increased unit sales and earnings by 10 percent due to: a. reduction in supply b. increases in both supply and demand c. demand being elastic d. demand being inelastic e. market share fluctuations ANS: C When Procter & Gamble reduced prices, sales and revenues increased. This shows that the demand for chips is elastic. PTS: 1 REF: 307 Thinking KEY: CB&E Model Pricing OBJ: 19-3 TOP: AACSB Reflective MSC: BLOOMS Application 44. _____ occurs when an increase in sales exactly offsets a decrease in price so that total revenue remains exactly the same. a. Inelastic demand b. c. d. e. Functional elasticity of demand Unitary elasticity Highly elastic demand Fixed elasticity ANS: C Unitary elasticity is a situation in which total revenue remains the same when prices change. PTS: 1 REF: 307 Thinking KEY: CB&E Model Pricing OBJ: 19-3 TOP: AACSB Reflective MSC: BLOOMS Knowledge 45. When price decreases and total revenue falls, demand is: a. elastic b. inelastic c. absolute d. unitary e. stable ANS: B This is characteristic of inelastic demand, which means that an increase or decrease in price will not significantly affect the demand for the product. PTS: 1 REF: 307 Thinking KEY: CB&E Model Pricing OBJ: 19-3 TOP: AACSB Reflective MSC: BLOOMS Knowledge 46. When the NES Group lowered the price of its professional-grade meat slicers from $2,300 to $1,600, demand doubled from four units sold per month to eight units per month. However, total revenue dropped. This is an example of: a. substitute goods b. unitary elasticity c. elastic demand d. consumer shortage e. inelastic demand ANS: E Inelastic demand is characterized by price and revenue both falling. PTS: 1 REF: 307 Thinking KEY: CB&E Model Pricing OBJ: 19-3 TOP: AACSB Reflective MSC: BLOOMS Application 47. When Nesco brand food hydrators sold for $59.99, Nesco sold 90 dehydrators. When the company dropped the price of its dehydrators to $44.95, it sold 145 dehydrators. Demand for the food dehydrators appears to be: a. elastic b...
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