Microsoft Hires Marketing and Sales Specialists to Decide What Prices

question 151

Multiple Choice

Microsoft hires marketing and sales specialists to decide what prices it should set for its products, whereas a wealthy corn farmer in Iowa, who sells his output in the world commodity market, does not.Why is this so?

• A)because Microsoft is large enough to hire the best people in the field
• B)because Microsoft could potentially lose sales if it sets prices indiscriminately
• C)because the wealthy corn farmer is a price taker who chooses his optimal output independently of market price but Microsoft's optimal output depends on the price it selects
• D)because unlike Microsoft, the wealthy corn farmer is probably a monopolist

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Definitions:

Standard Deviation

An indicator of the degree to which values in a dataset spread out or deviate from the average value of the collection.

Mean

The average of a set of numbers, obtained by dividing the sum of the numbers in the set by their quantity.

Cumulative Binomial Probabilities

Cumulative binomial probabilities represent the probability of obtaining a certain number of successes or fewer in a fixed number of independent Bernoulli trials.

Approximate Binomial Distribution

Using a normal distribution to estimate the outcomes of a binomial distribution when the sample size is large and the probability of success is neither very small nor very large.