Kellogg's Has Several Cereals Targeted at Different Types of Users

question 14

Multiple Choice

Kellogg's has several cereals targeted at different types of users. This is an example of multiple products aimed at multiple markets. Manufacturing these different cereals is clearly more expensive than producing one, but seems worthwhile if it meets customers' needs better, doesn't reduce quality or increase price, and

• A)conforms to all FDA guidelines.
• B)adds to the manufacturer's sales revenues and profits.
• C)creates economy of scale.
• D)decreases the cost of the physical plant.
• E)stabilizes the sales revenues and profits.

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Definitions:

Expensive Goods

Products or services that have a high price relative to their intrinsic value or compared to other alternatives in the market.

Utility Function

A mathematical representation of how different combinations of goods or services can provide different levels of happiness or satisfaction to a consumer.

Indifference Curves

A graph that represents combinations of goods among which a consumer is indifferent, showing different levels of utility.

L-shaped

Often used to describe demand or recovery curves that have a rapid decline followed by a period of stagnation.