Question 1
Question 2
The absolute price elasticity of demand for a product for which annual expenditures make up a very small share of a typical consumer’s budget is probably:
a. less than 1.
b. equal to 1.
c. greater than 1.
d. infinity.
A consumer budget refers to the purchasing potential with which a consumer can buy a pair of goods if their prices are favorable. The market determines the price of goods. Consumer budgets are useful as they help people in prioritizing their investments, organizing their finances, and ensuring that people living within their means.
Question 3
A team organization has:
a. people floating from project to project.
b. units that are large and indivisible.
c. a rigid bureaucratic organizational context.
d. an underlying functional hierarchy.
Business firms have choices about ways to organize the work to be done. The larger the organization, the more thought and effort will be needed to divide and assign the work to be done.
Question 4
Define the following: Customer Equity. Should it be high or low?
A customer relationship in business is a key element to success. It establishes trust and loyalty between a company and its customers, there are many ways to build customer relationships. Some companies offer loyalty programs, others have excellent customer service, and others go above and beyond to satisfy their customers.
Answer to question 1
Answer to question 2
Answer and Explanation: The correct answer is option A: Less than 1 Elastic demand refers to a situation in which a change in price causes a considerable change in the quantity demanded. Inelastic demand refers to a situation in which the change in demand as a result of a price change is negligible. It is called inelastic when a price change for a product does not result in much, if any, change in supply or demand. Generally, it denotes a commodity that is either a need or a luxury item with addictive properties. Gasoline and milk are perfect examples of such goods. Additional Information Option b is incorrect. The elasticity of demand is unitary if the number is equal to one. To put it another way, quantity demanded or supplied and price are both changing at the same time. Option c) is incorrect. When the price elasticity of demand exceeds one, it is said to be elastic. That is, a price increase will affect demand for the product. Option d) is incorrect. The extreme example of infinite or perfect elasticity occurs when the quantity sought or supplied changes by an unlimited amount in response to any change in price. The extreme situation of zero elasticity occurs when a percentage change in price, no matter how high, results in no change in quantity.
Answer to question 3
Answer and Explanation: A team organization has a. people floating from project to project. Teams are generally organized by function – accounting, marketing, etc. Some organizations use special project teams as well. This works for some but can also cause conflicts when a single employee reports to and is responsible to more than one manager. These answers are incorrect; b. units that are large and indivisible. No, that would be a more traditional type of structure. c. a rigid bureaucratic organizational context. No, a team structure is not rigid. d. an underlying functional hierarchy. No, there is no hierarchy in a team-based organization.
Answer to question 4
Answer and Explanation: Customer equity is the total combined value of all customer and company interactions over time. There are a few different ways to calculate customer equity. The most common methods involve taking into account factors such as customer acquisition costs, retention rates, and average spend per customer. Customer equity is important because it provide insight into how valuable individual customers are to a business. By understanding customer equity, companies can make more informed decisions about things like marketing efforts and product development. Customer equity should be high to ensure that the company can keep customers happy and coming back. However, there may be times when a company decides to focus on acquiring new customers instead of retaining existing ones. In such cases, customer equity would take a backseat to other priorities. Ultimately, it is up to each business to decide what their strategy should be with regards to customer equity.