During the Height of the Pet Rock Craze in the 1970s

question 26

Multiple Choice

During the height of the pet rock craze in the 1970s, the price elasticity of demand was estimated to be 1.80.Since pet rocks have a marginal cost of zero, a profit-maximizing seller of pet rocks would

• A)leave prices unchanged.
• B)decrease prices.
• C)increase prices.
• D)need more-detailed market information before making any pricing changes.
• E)diversify into selling Karen Carpenter LPs.

Understand the influence of cost on pricing tactics and the rationale behind price adjustments.

Understand the basic principles of classical conditioning.

Identify and distinguish between conditioned and unconditioned stimuli and responses.

Recognize examples of classical conditioning in everyday life.

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Definitions:

Loan Amount

The total sum of money borrowed by an individual or entity from a lender, which is expected to be repaid with interest.

Future Value

The value of a current asset at a specified date in the future based on an assumed rate of growth over time.

Present Value

The current evaluation of a forthcoming cash amount or cash flow series, considering a specific rate of financial return.

Land Rent

Land rent is the payment made for the use of a piece of land, representing the value derived from its use.