When a Person's Consumption Goes from $8,000 to $12,000 When

question 41

Multiple Choice

When a person's consumption goes from $8,000 to $12,000 when her disposable income goes from $10,000 to $20,000, her MPC equals:

• A)​0.4.
• B)​0.6.
• C)​0.75.
• D)​0.8.

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Definitions:

Below-market Pricing

Below-market pricing is a strategy where goods or services are sold at a price lower than the prevailing market rate to attract customers and increase market share.

Magnet Pricing

A strategy used by retailers to attract customers by advertising very low prices on a few items with the expectation that once customers are in the store, they will purchase additional items.

Price War

Successive price cutting by competitors to increase or maintain their unit sales or market share.

Market Share

The proportion of total sales in a market captured by a particular brand, product, or company, usually expressed as a percentage of total sales in the industry.