Which of the Following Is True of Price Changes

question 125

Multiple Choice

Which of the following is true of price changes?

• A) Over-demand leads to companies initiating price cuts.
• B) Changes in price do not affect a brand's image.
• C) Customer reaction to price changes is not as important as competitor reaction.
• D) A drop in price can adversely affect how consumers view the brand.
• E) Excess capacity is a factor that causes increases in price.

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Definitions:

Perfectly Inelastic

A situation where the demand for a product does not change in response to changes in price; the demand curve is perfectly vertical.

Gas-guzzler Automobiles

Describes vehicles that are inefficient in their fuel consumption, typically with lower miles per gallon.

Japanese Fuel-efficient Cars

Automobiles produced by Japanese manufacturers known for their high fuel efficiency and innovative engineering.

Consumer

A person or collective that buys products and services for private consumption.