Question

1. When the price of a soda from the campus vending machine was $0.50 per can, 100 cans were sold each day. After the price increased to $0.60 per can, sales dropped to 80 cans per day. Over this range, the absolute price elasticity of demand for soft drinks was approximately equal to

   	A.	1.00
   	B.	2.00
   	C.	1.47
   	D.	1.22

1 points   

QUESTION 9

1. Luna is a manufacturer of fashion jewelry. The CEO of Luna makes sure that the company frequently introduces new styles of jewelry to suit changes in tastes and stay a step ahead of her competitors. Which of the following success drivers of performance is the CEO using?

   	A.	cost competitiveness
   	B.	innovation
   	C.	service
   	D.	quality

Answer 1

1) When the price of a soda from the campus vending machine was $0.50 per can, 100 cans were sold each day. After the price increased to $0.60 per can, sales dropped to 80 cans per day. Over this range, the absolute price elasticity of demand for soft drinks was approximately equal to: A. 1.00

Absolute price elasticity of demand = |(% change in quantity)/(% change in price)| (absolute value)

% change in quantity = 100 × (Final quantity - Initial quantity)/Initial quantity = 100 × (80 - 100)/100 = - 20%

% change in price = 100 × (Final price - Initial price)/Initial price = 100 × (0.60 - 0.50)/0.5 = 20%

Absolute price elasticity of demand =

= |(% change in quantity)/(% change in price)|

= |(-20)/(20)|

= |-1.00|

= 1.00

2) Luna is a manufacturer of fashion jewelry. The CEO of Luna makes sure that the company frequently introduces new styles of jewelry to suit changes in tastes and stay a step ahead of her competitors. Which of the following success drivers of performance is the CEO using?: B. innovation

Innovation means when an organisation tries to implement new ideas/produce new products in order to stay relevant in its market, cater to changing tastes and beat its competitors. This is exactly what Luna is doing.

Cost competitiveness refers to the ability of a firm to continue producing at the lowest possible costs and achieve cost advantage in a market.

Service refers to providing the customer with a unique positive experience, especially after sale, so as to increase customer retentivenes.

Quality refers to producing goods which are superior than other available goods, so as to gain customer loyalty.