MBA 650 Econ of Mngrl Decisions ACTUAL UPDATED QUESTIONS AND
CORRECT ANSWERS
After acquiring a substitute product, raise price on both True
goods, but raise price more on the more elastic (low-
margin) product.
After acquiring a substitute good, raise price on both True
goods.
After acquiring a complementary product, reduce price True
on both products to increase profit.
A top producer of tennis balls has recently started Lower the price of its tennis balls.
manufacturing tennis rackets, a complementary product
to tennis balls. As a result, it should
A very profitable, high-margin chain of ice cream shops Raise the price of ice cream, and raise the price of yogurt even more.
has acquired its main competitor, a low-margin frozen
yogurt chain. It should
The owners stop building additional capacity when LRMR True
= LRMC
If MR > MC at capacity, then price to fill available True
capacity.
Long-run marginal cost a. is the cost of building, maintaining, and using an additional unit of capacity.
b. is likely to be greater than short-run marginal cost.
c. is useful for determining how much capacity to build, but is not useful for
setting price.
d. All of the above
Advertising that conveys an image of high product less elastic ; price increase
quality makes demand ____ and should be
accompanied with a_______ _.
To go along with its new advertising campaign, a A favorable price comparison to a rival product.
company reduced its prices. The advertising likely
featured
Managing price expectations is as important as managing True
price.
Which of the following is likely to be a profitable A pizza restaurant changes from charging a "delivery charge" to offering an "in-
adjustment to pricing strategy? store discount."
CORRECT ANSWERS
After acquiring a substitute product, raise price on both True
goods, but raise price more on the more elastic (low-
margin) product.
After acquiring a substitute good, raise price on both True
goods.
After acquiring a complementary product, reduce price True
on both products to increase profit.
A top producer of tennis balls has recently started Lower the price of its tennis balls.
manufacturing tennis rackets, a complementary product
to tennis balls. As a result, it should
A very profitable, high-margin chain of ice cream shops Raise the price of ice cream, and raise the price of yogurt even more.
has acquired its main competitor, a low-margin frozen
yogurt chain. It should
The owners stop building additional capacity when LRMR True
= LRMC
If MR > MC at capacity, then price to fill available True
capacity.
Long-run marginal cost a. is the cost of building, maintaining, and using an additional unit of capacity.
b. is likely to be greater than short-run marginal cost.
c. is useful for determining how much capacity to build, but is not useful for
setting price.
d. All of the above
Advertising that conveys an image of high product less elastic ; price increase
quality makes demand ____ and should be
accompanied with a_______ _.
To go along with its new advertising campaign, a A favorable price comparison to a rival product.
company reduced its prices. The advertising likely
featured
Managing price expectations is as important as managing True
price.
Which of the following is likely to be a profitable A pizza restaurant changes from charging a "delivery charge" to offering an "in-
adjustment to pricing strategy? store discount."
