# Least sensitive to price increases a spring break

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least sensitive to price increases? A. Spring break vacations. B. A specific brand of cereal. C. Prescription drugs. D. Theater tickets. E. Restaurant meals. Prescription drugs are a necessity for those who need them, and demand for necessities is not

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particularly sensitive to price increases. AACSB: Analytic Blooms: Understand Difficulty: 3 Hard Learning Objective: 13-03 Explain price elasticity. Topic: 5 Cs of Pricing 67. (p. 274-275) For which of the following is demand likely to be most sensitive to price increases? A specific brand of soft drink has many substitutes, and so demand is likely to be sensitive to price increases. One exception would be extremely brand-loyal consumers. AACSB: Analytic Blooms: Understand Difficulty: 3 Hard Learning Objective: 13-03 Explain price elasticity. Topic: 5 Cs of Pricing 68. (p. 274) Price elasticity of demand is the: Price elasticity of demand is the ratio of percent change in quantity demanded and percent change in price. AACSB: Analytic Blooms: Understand Difficulty: 3 Hard Learning Objective: 13-03 Explain price elasticity. Topic: 5 Cs of Pricing 69. (p. 274) A study found that, among addicted smokers, a 10 percent increase in the price of cigarettes resulted in a 2 percent decrease in quantity demanded. For
these consumers, cigarettes have a(n) __________ price elasticity demand. A. elas tic B. inelastic C. cross-price D. income effect E. substitution effect If a ten percent price increase results in a two percent reduction in demand, price elasticity of demand is equal to -2/10 = -0.2. Price elasticity greater than -1.0 reflects inelastic demand. AACSB: Analytic Blooms: Understand Difficulty: 3 Hard Learning Objective: 13-03 Explain price elasticity. Topic: 5 Cs of Pricing 70. (p. 274) If a 1 percent decrease in price results in more than a 1 percent increase in quantity demand, demand is: If a 1% price decrease results in, say, a 1.1% increase in demand, price elasticity is equal to 1.1/-1 = -1.1. Price elasticity of less than -1.0 reflects elastic demand. AACSB: Analytic Blooms: Understand Difficulty: 2 Medium Learning Objective: 13-03 Explain price elasticity. Topic: 5 Cs of Pricing 71. (p. 274) Near the end of the summer season, Sergio still has a large inventory of bathing suits. He needs to sell them rather than holding them over till next season, because colors and styles often change.

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