Bottles of pure hawaiian air contain air that smells

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38. Bottles of Pure Hawaiian Air contain air that smells like the floral bouquet that greets tourists as they get off the plane in Hawaii. When a tourist shop began selling Pure Hawaiian Air, it charged $5 per bottle and could not keep up with the demand. It has since raised the price to $7. Now the shop is still selling all the bottles of Pure Hawaiian Air it carries, but the owner is not forced to reorder on a daily basis. The $7 price is probably a(n): a. supply schedule b. symmetrical price c. price equilibrium d. inventory equalizer e. inelastic price ANS: C When demand and supply are approximately equal, price equilibrium is reached. PTS: 1 REF: 300 OBJ: 19-3 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Pricing 39. Consumers’ responsiveness or sensitivity to changes in prices is known as: PTS: 1 REF: 300 OBJ: 19-3 TYPE: Def TOP: AACSB Reflective Thinking | TB&E Model Pricing 40. When consumers are sensitive to price changes, _____ occurs.
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41. While the sales of the Apple iPhone have been great from the beginning, when Apple released its iPhone 3G cut the price of the iPhone for $399 to $199 sales exploded with one million iPhones sold the first weekend. Demand for the iPhone appears to be _____. PTS: 1 REF: 300 OBJ: 19-3 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Pricing 42. What happens when demand is elastic? a. As price goes up, revenue goes down. b. As price goes down, revenue goes down. c. As price goes up, revenue goes up. d. As price goes up, revenue does not change. e. As price goes down, revenue does not change. ANS: A If demand is elastic, price increases will decrease demand by a larger amount, reducing total revenue. PTS: 1 REF: 300 OBJ: 19-3 TYPE: Comp TOP: AACSB Reflective Thinking | TB&E Model Pricing 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, Procter & Gamble increased unit sales and earnings by 10 percent due to: PTS: 1 REF: 300 OBJ: 19-3 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Pricing
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