Neville from Your Workbook Has a Friend Named Peregrine

question 51

Multiple Choice

Neville from your workbook has a friend named Peregrine. Peregrine has the same demand function for claret as Neville, namely q = .02m - 2p, where m is income and p is price. Peregrine's income is $6,500 and he initially had to pay a price of $50 per bottle of claret. The price of claret rose to $60. The substitution effect of the price change

• A) reduced his demand by 20.
• B) increased his demand by 20.
• C) reduced his demand by 14.
• D) reduced his demand by 26.
• E) reduced his demand by 24.

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Definitions:

AIDA Approach

A marketing strategy model that stands for Attention, Interest, Desire, and Action, used to guide the process of advertising and sales techniques.

Transactional Selling

A sales approach focused primarily on achieving quick sales transactions rather than building long-term customer relationships.

SPIN Procedure

A sales technique that involves asking Situation, Problem, Implication, and Need-payoff questions to understand and address customer needs.

New-Task Buying

The process of making a purchase decision for a product or service that a buyer has no previous experience with.