Question 1

Demand for which of the following products or services is most likely inelastic?

Accepted Answer

Inelastic demand means that an increase or a decrease in price will not significantly affect the demand for the product.Demand for milk is fairly steady regardless of its price.

Question 2

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:

Accepted Answer

The first price is $59.99 with total revenue of $5,399.10;the second price is $44.95 with total revenue of $6,517.75.Therefore,price dropped,and total revenue went up.

Question 3

When consumers are sensitive to price changes,_____ occurs.

Accepted Answer

This is the definition of elastic demand.

Question 4

Most demand curves slope:

Accepted Answer

For most products when prices increase,demand will decrease.

Question 5

When the price of a product is set at a level where demand and supply are the same,_____ has been achieved.

Accepted Answer

Price equilibrium is the price at which demand and supply are equal.

Question 6

_____ is the quantity of a product that will be offered to the market at various prices for a specified period.

Accepted Answer

This is the definition of supply.

Question 7

Peggy's Twist Shack sells soft-serve ice cream.Peggy graphed the demand per week for vanilla ice cream cones.The graph indicates a demand schedule that slopes downward and to the right.This graph indicates that the quantity of vanilla ice cream cones demanded increases as:

Accepted Answer

The lower the price,the more goods or services will be demanded.

Question 8

At a price of $6,000,only 191 of the Moulton 60 model bicycle are being made.If Moulton sells each one of the bicycles at that price,then a state of _____ has been achieved.

Accepted Answer

Price equilibrium is achieved at the price at which supply is equal to demand.

Question 9

What happens when demand is elastic?

Accepted Answer

If demand is elastic,price increases will decrease demand by a larger amount,reducing total revenue.

Question 10

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):

Accepted Answer

When demand and supply are approximately equal,price equilibrium is reached.

Question 11

When the NES Group lowered the price of its professional-grade meat slicers from $2,300 to $1,600,demand doubled from 4 units sold per month to 8 units per month.However,total revenue dropped.This is an example of:

Accepted Answer

Inelastic demand is characterized by price and revenue both falling.

Question 12

Which of the following would imply demand would be elastic?

Accepted Answer

When there are many substitute products,the consumer can easily switch from one product to another,making demand elastic.The other situations make demand inelastic.

Question 13

The _____ is the quantity of a product that will be sold in the market at various prices for a specified time period,and _____ is the quantity of a product that will be offered to the market by suppliers at various prices for a specified period.

Accepted Answer

These are the definitions of supply and demand.

Question 14

Consumers' responsiveness or sensitivity to changes in prices is known as:

Accepted Answer

This is the definition of elasticity of demand.

Question 15

If price _____ and revenue _____,demand is elastic.

Accepted Answer

If price goes down and revenue goes up,demand is elastic.

Question 16

While the sales of the Apple iPhone have been great from the beginning,when Apple released its iPhone 3G and cut the price of the iPhone for $399 to $199,sales exploded.One million iPhones sold the first weekend.Demand for the iPhone appears to be:

Accepted Answer

Elastic demand occurs when consumers by more or less of a product when the price changes.

Question 17

All of the following factors directly affect the elasticity of demand EXCEPT:

Accepted Answer

Inputs at time of manufacture only indirectly affect the demand,if at all.

Question 18

When price decreases and total revenue falls,demand is:

Accepted Answer

This is characteristic of inelastic demand,which means that an increase or decrease in price will not significantly affect the demand for the product.

Question 19

The price of the good or service is a key decision for a marketer because it most significantly and directly affects the product's:

Accepted Answer

The quantity of a product that people will buy depends on its price.

Question 20

_____ occurs when an increase in sales exactly offsets a decrease in price so that total revenue remains exactly the same.

Accepted Answer

Unitary elasticity is a situation in which total revenue remains the same when prices change.

Quiz 19: Pricing Concepts