Question 24 If a hot dog manufacturer acquires a bakery that primarily bakes hot

Question

Question 24

If a hot dog manufacturer acquires a bakery that primarily bakes hot dog buns, you would likely see

a.

Lower prices for both the hot dogs and the buns

b.

Higher prices for both the hot dogs and the buns

c.

Higher prices for the buns but lower prices for the hot dogs

d.

Higher prices for the hot dogs but lower prices for the buns

4 points

Question 25

The general rule to increase profits when two close complementary 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

a.

Lower prices for both the hot dogs and the buns

b.

Higher prices for both the hot dogs and the buns

c.

Higher prices for the buns but lower prices for the hot dogs

d.

Higher prices for the hot dogs but lower prices for the buns

Explanation / Answer

24) Option (A) - if a hotdog manufacturer acquires a bakery ,in general one can find lower prices for both the hot dogs and the buns.

25) Option(B) - prices of complementary goods are tend to be negatively correlated , therefore in order to increase the profits of the complementary gooods that are jointly owned ,decreases prices for both goods.

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