Chapter 12—Demand and Revenue Management Key
1. According to the case, price has a disproportionate effect on the bottom line relative to
2. Companies spend ____ on pricing decisions.
3. Knowing demand is equivalent to knowing the
4. In general, elasticities measure
5. Price elasticity of demand is defined as
6. Demand elasticity can be
7. If price elasticity is 3.25 then
8. If price elasticity is 3.25, then demand is
9. If demand is perfectly elastic, then
10. If something is addictive, then
11. If demand is perfectly elastic,
12. If price is cut and demand is elastic, then
13. If price is cut and demand is elastic, total revenue will rise because
14. If price is cut and demand is inelastic, then
15. If price is cut and demand is inelastic, total revenue will fall because
16. When demand is inelastic,
17. When demand is elastic
18. When demand is unit elastic
19. The presence of substitute goods will tend to make demand more
20. Brand name products tend to have demand curves that are relatively more inelastic because
21. A manager can determine if her product is viewed as a normal good or an inferior good by considering
22. Income elasticity is defined as the
24. A luxury good has
25. Inferior goods may also be referred to as
26. Cross elasticity tells a manager that the product they produce is
27. Assume that product X has a positive cross elasticity with respect to shoes. If the price of shoes rises
28. Assume that product X has a negative cross elasticity with respect to shoes. If the price of shoes rises
29. Price elasticity
30. The science of “knowing the customer” is referred to as
31. Elasticities measure the response of one variable to random shocks from unknown factors.
32. If price elasticity is greater than one, then demand is said to be elastic.
33. If price elasticity is less than one, then demand is said to be inelastic.
34. Products that have inelastic demand have many substitutes.
35. A perfectly elastic demand curve is a vertical line.
36. Price and total revenue move in opposite directions when demand is elastic.
37. Price and total revenue move in opposite directions when demand is inelastic.
38. If demand is unit elastic, an increase in price will lead to an increase in total revenue.
39. Income elasticity is used to determine whether a product is a normal or inferior good.
40. If income elasticity is positive, a product is inferior.
41. A positive cross elasticity indicates a substitute relationship.
42. If cameras and film have a cross elasticity of .985, they are complements
43. Computer technology has enhanced a manager’s ability to “know the customer.”