In Some Markets Consumers May Buy Many Different Brands of a Product

question 133

Multiple Choice

In some markets consumers may buy many different brands of a product. Which of the statements below best represents a situation where demand for a particular brand would be very elastic?

• A) "The different brands are almost identical. I always buy the cheapest."
• B) "I use so little of that product that when I do buy it, I don't pay much attention to the price."
• C) "The brand I buy is so superior to other available brands that I hardly consider the others."
• D) "I pinch pennies in buying other products, but like most people, I feel I owe it to myself to get the best brand of this product."

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Definitions:

Operating Profit

The income generated by a company's main business activities, not including interest and tax deductions.

Markdown

A reduction from the original or previous selling price of goods or services.

Breakeven

The juncture where total expenses match total income, leading to neither a net profit nor a loss.

Mark-up

A financial addition to the product's cost to cater to company overheads and profit gain.