MG WPR4 UPDATED SCRIPT 2026
PRACTICE SOLUTIONS GRADED A+
●● All of the following choices are examples of promoting a firm's
product, except:
a. celebrity endorsements.
b. pricing T. pricing
c. discount coupons.
d. end-of-aisle display. Answer: T. pricing [correct; pricing often
responds to changes in demand brought about by promotions]
●● Firms tend to raise the price of their goods after acquiring a firm that
sells a substitute good because:
a. the aggregate demand for both goods is more elastic than the demand
for the individual goods.
b. the aggregate demand for both goods is less elastic than the demand
for the individual goods. T. the aggregate demand for both goods is less
elastic than the demand for the individual goods.
c. there is an increase in the overall demand for their products.
,d. they lose market power.. Answer: T. the aggregate demand for both
goods is less elastic than the demand for the individual goods. [correct;
the aggregate demand for substitute products is less elastic than the
individual demands.]
●● A firm started advertising its product and this changed the product's
elasticity from -2 to -1.5. The firm should:
a. reduce price from $10 to $7.5. F. reduce price from $10 to $7.5.
b. reduce price from $15 to $10.
c. raise price from $7.5 to $10.
d. raise price from $10 to $15.. Answer: T. raise price from $10 to $15.
[correct; using the formula (P-MC)/P=1/ - e - , prices rise by 50%.]
●● On average, if demand is unknown and costs of underpricing are
_____than the costs of overpricing, then _________:
a. smaller; underprice T. smaller; underprice
b. No available answers are correct
, c. smaller; overprice
d. larger; underprice. Answer: smaller; underprice T. smaller; underprice
[correct; since the costs of underpricing are smaller, one should
underprice.]
●● A firm that acquires a substitute product can reduce cannibalization
by:
a. repositioning a product so that it does not directly compete with the
substitute. T. repositioning a product so that it does not directly compete
with the substitute.
b. doing nothing.
c. lowering prices on the low-margin products.
d. setting the same price on both products.. Answer: repositioning a
product so that it does not directly compete with the substitute. T.
repositioning a product so that it does not directly compete with the
substitute. [correct; If consumers do not perceive the products as
substitutes, then cannibalization is reduced.]
PRACTICE SOLUTIONS GRADED A+
●● All of the following choices are examples of promoting a firm's
product, except:
a. celebrity endorsements.
b. pricing T. pricing
c. discount coupons.
d. end-of-aisle display. Answer: T. pricing [correct; pricing often
responds to changes in demand brought about by promotions]
●● Firms tend to raise the price of their goods after acquiring a firm that
sells a substitute good because:
a. the aggregate demand for both goods is more elastic than the demand
for the individual goods.
b. the aggregate demand for both goods is less elastic than the demand
for the individual goods. T. the aggregate demand for both goods is less
elastic than the demand for the individual goods.
c. there is an increase in the overall demand for their products.
,d. they lose market power.. Answer: T. the aggregate demand for both
goods is less elastic than the demand for the individual goods. [correct;
the aggregate demand for substitute products is less elastic than the
individual demands.]
●● A firm started advertising its product and this changed the product's
elasticity from -2 to -1.5. The firm should:
a. reduce price from $10 to $7.5. F. reduce price from $10 to $7.5.
b. reduce price from $15 to $10.
c. raise price from $7.5 to $10.
d. raise price from $10 to $15.. Answer: T. raise price from $10 to $15.
[correct; using the formula (P-MC)/P=1/ - e - , prices rise by 50%.]
●● On average, if demand is unknown and costs of underpricing are
_____than the costs of overpricing, then _________:
a. smaller; underprice T. smaller; underprice
b. No available answers are correct
, c. smaller; overprice
d. larger; underprice. Answer: smaller; underprice T. smaller; underprice
[correct; since the costs of underpricing are smaller, one should
underprice.]
●● A firm that acquires a substitute product can reduce cannibalization
by:
a. repositioning a product so that it does not directly compete with the
substitute. T. repositioning a product so that it does not directly compete
with the substitute.
b. doing nothing.
c. lowering prices on the low-margin products.
d. setting the same price on both products.. Answer: repositioning a
product so that it does not directly compete with the substitute. T.
repositioning a product so that it does not directly compete with the
substitute. [correct; If consumers do not perceive the products as
substitutes, then cannibalization is reduced.]
