1) Arbitrage: a) Is the act of to buying low in one market and selling high in a
ID: 1195074 • Letter: 1
Question
1) Arbitrage:
a) Is the act of to buying low in one market and selling high in another market
b) Can force a seller to go back to uniform pricing
c) Can defeat direct price discrimination
d) All of the above
2) After massive promotion of Justin Bieber's latest music album, the producers reacted by raising prices for his albums. This implies that promotion expenditures made the album demand
a) More Elastic
b) Unitary elastic
c) The Change is due to psychological pricing
d) Less elastic
3) Metering is
a) A type of indirect price discrimination
b) A type of direct price discrimination
c) An evaluation of a product
d) An example of bundling
4) Cannibalization is:
a) Reducing the sales of own firm
b) Improving quality over a rival's product
c) Reducing costs
d) Increasing one's output to reduce sales of another firm
5) All the below choices are examples of promoting a firm's product, except
a) Advertising
b) Pricing
c) Discount coupons
d) End-of-aisle display
Explanation / Answer
1. Arbitrage-d) all of the above. It is a practice of simultaneously purchasing in lower price market and selling the same in higher price market. It successfully defeat price discrimination
2. d) Less elastic. This means that percentage change in price is less affects percentage change in quantity demand. That is why producer is able to raise its price.
3. a) A type of indirect price discrimination. metering identifies the high valued customer by noticing intensity of their use of a related product.
4. a) Reducing the sales of own firm. Cannibalization refers decrease in sale of existing product due to new product introduced by the same firm.
5. b) Pricing. This responds to change in product demand which is created by product promotion. So pricing is not a promotion but a result of promotion.
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