03 Jun Question Question 1 After acquiring a substitute product
Question
Question 1
After acquiring a substitute product, to achieve greater profitability, one should:
a. Raise price on both products, but raise price more on the less price elastic product
b. Raise price on both products, but raise price more on the more price elastic product
c. Raise price on just the more price elastic
d. Raise price on just the less price product
Question 2
Firms tend to raise the price of their goods after acquiring a firm that sells a substitute
good because:
a. There is an increase in the overall demand for their products
b. They lose market power
c. The bundle has a more inelastic demand than individual goods
d. The bundle has a more elastic demand than individual goods
Question 3
Firms tend to lower the price of their goods after acquiring a firm that sells a
complementary good because:
a. There is an increase in the overall demand for their products
b. They gain market power
c. The bundle has a more inelastic demand than individual goods
d. The bundle has a more elastic demand than individual goods
Question 4
If promotional expenditures make demand:
a. Less elastic, then you should reduce price when you promote the product
b. More elastic, then you should increase price when you promote the product
c. More elastic, then you should reduce price when you promote the product
d. Less inelastic, then you should increase price when you promote the product
Question 5
Domino Sugar Company is considering buying Fisher Honey Company for $100 million.
Based on information obtained from 500 supermarkets around the country, when the
price of 1 lb. of Domino Sugar went on sale from $2.00 to $1.50, the average number of 1
lb. boxes of sugar rose from 200 boxes in a week to 300 boxes. The following week,
when 1 lb. boxes of Fisher Honey went on sale for $2.50 from the original price of $3.00,
the number of boxes of honey sold increased from 200 to 275 boxes. If the sale of Fisher
Honey to Domino Sugar goes through, what changes to each products price Domino
Sugar make?
a. Increase the price of both, but increase the price of Fisher Honey more
b. Increase the price of both, but increase the price of Domino Sugar more
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