Suppose Microsoft Announces It Is Cutting the Prices of Some

question 147

Multiple Choice

Suppose Microsoft announces it is cutting the prices of some of its software titles (mainly games) by 25 percent. Assuming that Microsoft is seeking to increase revenues, it must believe that the elasticity of demand for these products is

• A) elastic.
• B) inelastic.
• C) of unitary elasticity.
• D) perfectly inelastic.

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Definitions:

Goodwill

The intangible asset that arises as a result of the acquisition of one company by another for a premium value, representing aspects like brand, customer base, and reputation.

Tangible Capital

Physical assets owned by a firm that are used in the production process, such as machinery, buildings, and equipment.

Nonresidential Structures

Buildings and constructions excluding residential homes, often commercial, industrial, or public use facilities.

Human Capital

The economic value of a worker's experience and skills, including factors like education, training, intelligence, skills, health, and other things employers value such as loyalty and punctuality.