When Marketers at Consolidated Mustard Company Tried to Determine Demand

question 5

Multiple Choice

When marketers at Consolidated Mustard Company tried to determine demand for their product, they found that at 50 cents, consumers wanted 2,000 jars; at $1.00, they wanted 6,000 jars; and at $1.50, they wanted 4,000 jars. What can Consolidated conclude?

• A)Consolidated did poor market demand research.
• B)Consolidated has an elastic product.
• C)Consolidated has an inelastic product.
• D)Consolidated mustard is a prestige good.
• E)Consolidated mustard has a normal demand curve.

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Definitions:

Underlying Asset

An asset on which a derivative instrument, such as an option or futures contract, is based, determining its value and performance.

April Option

A financial derivative contract that gives the holder the right, but not the obligation, to buy or sell an asset at a set price on or before a specific date in April.

American Put

An option contract giving the holder the right, but not the obligation, to sell a specified amount of an asset at a predetermined price before or on a specified expiration date.

European Call

An option contract that allows the holder to buy the underlying asset at a specific price only on the expiration date.