A leading game console manufacturer reduces the price of its flagship product by 10 percent. Holding other things such as income and preferences constant, which of the following is the most likely group behavior prediction

a The price reduction will have no impact on purchase patterns.

b Group behavior cannot be predicted for consumer goods

C Group behavior can be predicted for consumer goods only if the ceteris paribus assumption does not hold.

d The price reduction will be associated with a reduction in quality

The price reduction will increase the quantity of game consoles demanded

Question

Business

Wilkins

27 April, 05:10

A leading game console manufacturer reduces the price of its flagship product by 10 percent. Holding other things such as income and preferences constant, which of the following is the most likely group behavior prediction

a The price reduction will have no impact on purchase patterns.

b Group behavior cannot be predicted for consumer goods

C Group behavior can be predicted for consumer goods only if the ceteris paribus assumption does not hold.

d The price reduction will be associated with a reduction in quality

The price reduction will increase the quantity of game consoles demanded

+3

Answers (1)

Know the Answer?

Marina Cowan · Answer 1

E (Last one, you didn't put a letter for it)

Explanation:

The answer is E because a price reduction, depending on how large it is, will mostly have an effect on consumer, or in this case, customer sales. In this case, since it is a smaller percentage, it may not have a very big effect though.