New Phone ShorTech, is a smaller company that makes of knockoff consumer electronic devices including its Quadrant mobile phone. Sales had been doing okay for a number of months before ShorTech launched a massive advertising campaign in which it shows
that its phone can do just about everything the industry leader phone can do. What change in pricing would you suggest for the Quadrant phone concurrent with the campaign?
The advertising campaign will inform a lot more people about the product and so shift the demand out. But because of ShorTech's history of making knockoffs and because its phone is only almost as good as the leading phone, it is likely to attract more demand elastic customers. In this case, the optimal price-cost margin falls. You should suggest a sale during the campaign.
You might also like to view...
An argument in favor of 100 percent reserve banking is that
A) a bank deposit is owned by the depositor, so the bank has no legal right to lend the deposit to someone else. B) banks should be allowed to lend deposits in order to increase their profits and strengthen the banking system. C) unregulated institutions would be riskier than regulated fractional-reserve banks. D) it would limit the precision of the central bank's control over the quantity of money.
Which of the following is NOT an underlying characteristic of a smart group?
a. Aggregation b. Diversity of opinion c. Interdependence d. Decentralization
The downward sloping marginal revenue product of labor is
A. another term for the marginal revenue product of labor. B. the firm's short-run demand for labor. C. the firm's supply of labor. D. the firm's marginal cost of labor.
In contrast to Argentina in 2001, the United States debt is less of a burden because the U.S. debt is
a. an obligation to pay over a longer period of time. b. owed entirely to U.S. citizens and banks. c. an obligation to pay in domestic currency. d. an obligation to pay in foreign currency.