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:

Levels-Of-Processing Principle

A theory in cognitive psychology suggesting that the depth (shallow to deep) of mental processing affects memory recall, with deeper levels of processing leading to longer-lasting memory retention.

Retroactive Interference

The process by which new information impairs the retrieval of previously learned information.

Proactive Interference

A memory error that occurs when older information interferes with the recall of newer information.

Levels-Of-Processing Principle

A theory suggesting the depth of mental processing affects memory recall, with deeper levels of analysis producing more durable memory traces.