For Each Pair of Items Below Determine Which Product Would

question 351

Essay

For each pair of items below determine which product would have the higher price elasticity of demand (in absolute value).
A)Blood pressure medicine for someone who has high blood pressure or the purchase of Clairol hair coloring product.
B)A new Ford Fusion or a tank of gas for your current car.
C)A Seiko watch or watches in general.

• A)Blood pressure medicine for someone who has high blood pressure or the purchase of Clairol hair coloring product.
• B)A new Ford Fusion or a tank of gas for your current car.
• C)A Seiko watch or watches in general.

---

Definitions:

Transfer Price

The rate at which merchandise, services, or intellectual assets are transacted among branches of the same organization.

Human Resource Department

The department within an organization responsible for managing employee-related functions, from hiring to benefits.

High Powered Incentives

Incentive mechanisms designed to significantly motivate and reward individuals for achieving certain performance targets.

Compensation Schedule

A structured plan that outlines the salaries, wages, benefits, and bonuses that employees receive from an employer.