Magnira Corp

question 14

Multiple Choice

Magnira Corp. is an apparel company. After a slow start, it saw a steep rise in its clientele and a remarkable increase in its profits. However, with the launch of other apparel manufacturers in the market, the profits of Magnira have started declining. To sustain its growth in the market, the managers of Magnira should:

• A)focus on primary demand stimulation rather than advertising the brand.
• B)shift to aggressive brand advertising and open new branches.
• C)suggest top management to reduce the number of employees in the company.
• D)distribute the company's products at limited outlets.

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Definitions:

Consumer Surplus

The variance between the total price consumers are ready and able to fork over for a good or service and the sum they ultimately pay.

Deadweight Loss

A loss of economic efficiency that can occur when the equilibrium for a good or a service is not achieved or is not achievable.

Consumer Surplus

The difference between the total amount that consumers are willing to pay for a good or service and the total amount they actually do pay.

Consumer Surplus

The difference between what consumers are willing to pay for a good or service and what they actually pay, indicating the economic benefit to consumers.