1) if a firm successfully adopts a product differentiation strategy, the elastic
ID: 1215774 • Letter: 1
Question
1) if a firm successfully adopts a product differentiation strategy, the elasticity of demand for its products should
A) Increase.
b) Decrease
c) Become marginal
d) Be unaffected
2) Which of the following is critical for a firm adopting a long-term cost-reduction strategy?
A) The firm must also differentiate its product or service.
B) The strategy reduces costs by at least 10%.
C) The strategy is focused on reducing internal production costs.
D) The methods of achieving costs reductions are difficult to imitate.
3)All of the these are determinants of supply except:
A)Number of sellers
B)Taxes, Tariffs and Regulations
C)Expectations
D)Marginal costs
4) Which of the following is not a list of substitutes?
A)Toyota Camry, Honda Accord, Nissan Altima
B) McDonald's,Burger King, Taco Bell
C)Macy's, Nordstrom, Home Depot
D) Stolichnaya, Smirnoff, Grey Goose
A) The firm must also differentiate its product or service.
B) The strategy reduces costs by at least 10%.
C) The strategy is focused on reducing internal production costs.
D) The methods of achieving costs reductions are difficult to imitate.
Explanation / Answer
Answer 1:
Option B. In this case, the monopoly power of the firm will rise. Since, elasticity of demand is negatively related to monopoly power, the elasticity of demand will fall.
Answer 2:
Option C.
Answer 3:
Option D. Production cost in the form of price of the inputs or technology determine the supply of the good.
Answer 4:
Option A.
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