ECON 6100 Chapter 12: More Realistic and Complex Pricing.

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ECON 6100 Chapter 12: More Realistic and Complex Pricing.1. Acquiring a firm that sells a substitute good would make the demand curve for your original product a. More inelastic b. More elas ... tic c. Unchanged d. None of the above ANSWER: a TOPICS: Section 1: Pricing Commonly Owned Products 2. You own two different energy drink brands: “Blue Cow” and “600 minute energy.” If you reduce the price on “Blue Cow”, a. Sales of “Blue Cow” would increase, without any changes in sales for “600 minute energy.” b. Sales of both “Blue Cow” and “600 minute energy.” would increase c. Sales of “Blue Cow” would increase, but the sales of “600 minute energy” would be cannibalized d. Neither “Blue Cow” nor “600 minute energy” would see an increase in sales. ANSWER: c TOPICS: Section 1: Pricing Commonly Owned Products 3. You own two different energy drink brands: “Blue Cow” and “600 minute energy.” If you reduce the price on “Blue Cow”, sales of “600 minute energy” would a. Increase b. Decrease c. Not change d. None of the above ANSWER: b TOPICS: Section 1: Pricing Commonly Owned Products 4. You own two different energy drink brands with similar elasticities: “Blue Cow” and “600 minute energy.” If you reduce the price on “Blue Cow”, you can only increase your total sales if a. Prices for “600 minute energy” are increased b. Prices for “600 minute energy” are reduced c. Prices for “600 minute energy” stay constant d. None of the above ANSWER: b TOPICS: Section 1: Pricing Commonly Owned Products 5. The general rule to increase profits when two close substitute brands are jointly owned is a. Increase prices for both brands b. Decrease prices for both brands c. Increase prices on one brand, decreasing it for the other d. Increase prices on one brand, keeping the prices of the second brand constant ANSWER: a TOPICS: Section 1: Pricing Commonly Owned Products 6. After acquiring closely substitutable product brands, a firm can successfully raise prices on both of the brands without losing much of its total sales because a. Customers are insensitive to price changes b. None of these sales would be captured by its other brand c. Some of these sales lost by one brand would be captured by the other d. All of the above ANSWER: c TOPICS: Section 1: Pricing Commonly Owned Products 7. After acquiring a close substitute, to increase profits the firm must Raise prices on all the products equally a. b. Raise the prices only on products with high margins, while reducing prices on products with low margins c. Raise prices only on products with high margins, while keeping prices constant on products with low margins d. Raise prices on both the products, but raise the prices more for products with higher margins ANSWER: d TOPICS: Section 1: Pricing Commonly Owned Products 8. In a multi-product firm, cannibalization is a. An increase in the quality of both the brand’s products b. A decrease in the quality of both the brands products c. An increase in both the brand’s sales d. An increase in one of the brand’s sales due to the decrease in sales of the other. ANSWER: d TOPICS: Section 1: Pricing Commonly Owned Products [Show More]

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