Chapter 13 Pricing I part iv

Question 1

All of the following are demand factors except which?
A) the price of similar products
B) consumer tastes
C) consumer income
D) the availability of similar products
E) the form of promotion

Answer 1

E) the form of promotion

Question 2

While consumer tastes and price and availability of similar products determine what consumers want to buy, consumer income determines
A) where they buy.
B) the degree of brand loyalty.
C) the degree of repeat purchase.
D) what they can buy.
E) their likelihood of spreading positive word-of-mouth.

Answer 2

D) what they can buy.

Question 3

Which of these illustrates movement along the demand curve?
A) Demand increases due to a drop in price.
B) Demand increases due to a competitor leaving the market.
C) Demand increases due to consumer tastes changing.
D) Demand increases due to a competitor increasing its prices.
E) Demand increases due to an increase in consumer incomes.

Answer 3

A) Demand increases due to a drop in price.

Question 4

Which of these best illustrates a shift in the demand curve?
A) When prices remain the same, there is a significant change in supply.
B) As the price is raised, the quantity demanded increases, assuming all else stays the same.
C) When prices remain the same, there is an increase or decrease in demand.
D) As the price is lowered, the quantity demanded decreases, assuming all else stays the same.
E) An internal matter has forced a price change of some type, but it does not impact demand.

Answer 4

C) When prices remain the same, there is an increase or decrease in demand.

Question 5

Price elasticity of demand is expressed as
A) E = Percentage change in price ÷ Percentage change in quantity demanded.
B) E = Price ÷ Quantity demanded.
C) E = Percentage change in quantity demanded ÷ Percentage change in price.
D) E = Quantity demanded ÷ Price.
E) E = Quantity demanded × Price.

Answer 5

C) E = Percentage change in quantity demanded ÷ Percentage change in price.

Question 6

Elastic demand exists when
A) a small percentage decrease in price produces a smaller percentage increase in quantity demanded.
B) a small percentage decrease in price produces a larger percentage increase in quantity demanded.
C) an increase in price causes a larger increase in quantity demanded.
D) the quantity demanded remains the same regardless of level of price.
E) no change in price produces a small percentage change in quantity demanded.

Answer 6

B) a small percentage decrease in price produces a larger percentage increase in quantity demanded.

Question 7

Which of these statements about price elasticity of demand is most accurate?
A) The more substitutes a product has, the more likely it is to be price elastic.
B) All products show some price inelasticity.
C) Nondiscretionary (necessary) purchases are price elastic.
D) With inelastic demand, reducing price has a very large impact on revenues.
E) With inelastic demand, manufacturers change prices frequently to capitalize on consumer behavior.

Answer 7

A) The more substitutes a product has, the more likely it is to be price elastic.

Question 8

Inelastic demand exists when
A) a small percentage decrease in price produces a smaller percentage increase in quantity demanded.
B) a small percentage increase in price produces a larger percentage increase in quantity demanded.
C) an increase in price is impossible due to government restrictions.
D) the quantity demanded remains the same regardless of any changes in marketing strategies.
E) a small percentage decrease in price produces a smaller percentage increase in quantity supplied.

Answer 8

A) a small percentage decrease in price produces a smaller percentage increase in quantity demanded.

Question 9

If a firm finds the demand for one of its products is inelastic, it can increase its total revenues by
A) lowering its price.
B) increasing fixed costs only.
C) increasing variable costs only.
D) increasing both fixed and variable costs.
E) raising its price.

Answer 9

E) raising its price.

Question 10

demand for necessities is______ whereas demands for luxury products is ______

Answer 10

inelastic; elastic