Exam 12: More Realistic and Complex Pricing

Firm A producing one good acquires another firm B producing another good.The cross price elasticity of demand for the goods owned by each firm is 2.6.Holding other things constant,the acquiring firm should

After running a promotional campaign,the owners of a local shoe store decided to decrease the prices for the shoes sold in their store.One can imply that

Firms that face capacity constraints can only increase output only up to the capacity,but no further.Therefore,firms

For products like parking lots and hotels,costs of building capacity are mostly fixed or sunk and firms in this industry typically face capacity constraints.Therefore,

All of the following are true,except

The pricing rule MR=MC hold for

Firm A producing one good acquires another firm B producing another good.Price elasticity of demand for Firm A's good is -1.8 and Firm's B is -1.8.Holding other things constant and assuming both goods are complements,the acquiring firm should

A shoe producing firm decides to acquire a firm that produces shoe laces.This implies that

After firm A producing one good acquired another firm B producing another good,it raised the prices for the bundle of goods.One can conclude that the goods were

The four P's are

If advertising makes demand of a product more elastic,it makes sense for a firm to

Promotion is one dimension to competition.It represents

Firm's should lower the price of their goods

For products like parking lots and hotels,the relevant costs and benefits for setting price are

A firm started promoting its product through advertising.This changed the product's elasticity from -1.08 to -0.99.The firm should

Cannibalization is:

Firms tend to raise the price of their goods after acquiring a firm that sells a substitute good because

Firm A producing one good acquires another firm B producing another good.The cross price elasticity of demand for the goods owned by each firm is -1.4.Holding other things constant,the acquiring firm should

Firm's should raise the price of their goods

Firms tend to lower the price of their goods after acquiring a firm that sells a complementary good because