Due to Rapidly Rising Overhead Costs and Prices of Raw

question 31

Multiple Choice

Due to rapidly rising overhead costs and prices of raw materials, Screw Manufacturing Pty Ltd was forced to raise the prices of its nails, which Ruckles sells to timberyards and hardware stores, by 35 per cent. Other nail manufacturers have raised their prices for similar reasons. The sales force at Ruckles believes the price increase will result in a drop in sales. You are the marketing manager and you disagree, because the nails are:

• A) derived demand.
• B) price inelastic.
• C) price elastic.
• D) J- curve demand.
• E) fluctuating demand.

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Definitions:

Duty

A moral or legal obligation; a responsibility or task required by one's position, status, or law.

Prospectus

A public document disclosing relevant information about a corporation.

Expected Performance

Refers to the anticipated fulfillment of contractual obligations by the involved parties.

Internal Document

A document intended for use within a particular organization or group, not for public distribution.