Question

true or false

1. For an elastic demand curve, a 1% change in price results in a greater than 1% change in the quantity demanded.

2. When Colgate offers several different types of toothpaste to consumers who live in a geographically isolated community, this is an example of “captive product pricing.”

3. An example of Optional product pricing would be the optional features when purchasing a new car.

4. A society with three manufacturers, three customers, and no distributors will require nine exchanges in order to meet all of the customers’ needs.

5. A conventional consumer marketing distribution channel consists of a manufacturer (i.e. “producer”), a wholesaler, a retailer, and a consumer.

Answer 1

1. True

If the change in demand due to change in price is more, then demand is said to be elastic.

2. False

In captive product pricing, there are two products, one is core and other is captive products. In this, producers set the low price of core products and price of captive products which is mandatory to be used with core product will be high. For example computer and printer. In this case, we are not talking about any captive product and colgate here is a core and individual product which needs to be delivered to isolated areas.

3. True

In case of optional pricing the core product is cheaper and accessories with it are quit expensive. In case of car, it depends on consumer weather he wants to buy simple car or a car with expensive music players and other devices.

4. False

We do not know the category of product they are producing which may be substitute goods.

5.True

A conventional marketing follows the traditional approach where there are independent people working with the one objective which is delivering the product to the ultimate consumer.