A leading game-console manufacturer slashes the price of its flagship product by ten percent. Holding other things such as income and preferences constant, which of the following is the most likely group behavior prediction?
a. Price reduction will have no impact on purchase patterns
b. Price reduction will be associated with a reduction in quality; thereby reducing sales.
c. More game consoles will be sold at lower prices.
d. Group behavior cannot be predicted.
c
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The demand curve for canned peas is downward sloping. If the price of canned peas, an inferior good, rises, then
A) the income effect which causes you to reduce your canned peas purchases is smaller than the substitution effect which causes you to increase your purchases, resulting in a net increase in quantity demanded. B) the income and substitution effects offset each other but the price effect of an inferior good leads you to buy more canned peas. C) both the income and substitution effects reinforce each other to decrease the quantity demanded. D) the income effect which causes you to increase your canned peas purchases is smaller than the substitution effect which causes you to reduce your purchases, resulting in a net decrease in quantity demanded.
Securitization can not help financial intermediaries
A) diversify their portfolios. B) avoid bankruptcy. C) attract more investors to buy and hold their securities. D) decrease the cost of borrowing.