When Toyota Introduced Its 2010 Prius,it Announced That the Average

question 144

Multiple Choice

When Toyota introduced its 2010 Prius,it announced that the average retail price of the 2010 model would be lower than the average retail price was for the equivalent 2009 model.Which of the following would explain the price differential?

• A)The demand for the Prius had increased,and the supply of the Prius remained unchanged.
• B)The supply of the Prius had decreased,and the demand for the Prius remained unchanged.
• C)The demand for the Prius had decreased,and the supply of the Prius had increased.
• D)The demand for the Prius had increased,and the supply of the Prius had decreased.

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Definitions:

Mutual Interdependence

A situation in oligopoly markets where the actions of one firm significantly affect the outcomes and decisions of other competing firms.

Pricing Strategy

The approach a business takes to setting the price of its products or services, influenced by costs, competition, market demand, and other factors.

Kinked Demand

A market situation where a firm’s demand curve has a distinct bend, reflecting different elasticity above and below the market price.

Highly Concentrated Industry

An industry where a small number of firms hold a large market share, leading to reduced competition.