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QUESTION: 151

EZ, a manufacturer of electronic appliances, manufactures sandwich toasters, waffle makers, and sandwich-waffle makers. Recently, EZ reduced the price of sandwich-waffle makers by 20%. This increased the sales of sandwich-waffle makers by 20% and reduced the sale of sandwich toasters by 30% and waffle makers by 25%. Which of the following is true of this scenario?

The price elasticity of sandwich-waffle makers is -2.
The cross-price elasticity of sandwich-waffle makers and sandwich toasters is -1.
The cross-price elasticity of sandwich-waffle makers and waffle makers is -2.
Sandwich-waffle makers and sandwich toasters are likely to be substitute products.
Sandwich-waffle makers and waffle makers are complementary products.

Answer(s): D

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QUESTION: 152

Hermit, a fashion apparels retailer, recently slashed prices on its premium fashion label, Lau, by 40%. This resulted in a sharp rise in sales of Lau by 30%. This also directly impacted the sales of its lower-priced brand, Infinity, which saw sales reduced by 15%. What is the cross-price elasticity of demand between Lau and Infinity?

0.5
0.37
1.33
2
2.66

Answer(s): B

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QUESTION: 153

Which of the following is an example of impulse buying?

Ryan purchased a suit for his wedding after consulting a tailor.
While grocery shopping Sean picked up a pack of bubble-gum from the checkout counter.
Jim conducted a thorough Internet search before buying a new car.
Lily picked up a burger from a drive in restaurant on the way home.
Jordan purchased a mobile phone after being convinced by a sales presentation.

Answer(s): B

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QUESTION: 154

In which of the following cases is a firm making a business decision based on a strength, as identified in a SWOT analysis?

Celeborn Foods decided to sell a line of fast food in the Cambrian market as the company's product development team had significant experience in the market.
Crichton Inc. decided against opening a business in Cambria when the country's economy suffered a depression.
Aeryn Cosmetics decided to intensify its marketing efforts in the market when its closest competitor went out of business.
Green Bay Inc. changed its manufacturing process after the government imposed a new tax on one of the ingredients in its product.
Orangejello Inc. modified its product in the Cambrian market, to account for local tastes and preferences.

Answer(s): A

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