1. Suppose the elasticity of demand for the parking lot spaces at SM Downtown is -2 and price is 160 per day. If the MC is zero and the parking lot is 75% full at 10 a.m. over the last month, are they optimizing?

a. Justify your answer.

b. Show solution.

2. Mall Store retailers place their most expensive products right in the entryway of the store, where consumers will see them first, and place their more popular, better-selling items further back. Why?

For reference in number 2:

These are two main reasons for a high and retailer to place the most expensive products in the entryway of the store:

Branding: Placing those products in the entryway will capture customers' attention immediately. The most expensive products will appear in customers' discussions in their daily lives, which reminds them about the brand. As long as their brand is mentioned and recognized, it is a successful branding strategy. For high-end brands, the most expensive products are usually a signature version or limited edition, which encourages their customers to identify the brand immediately.

Generating a price benchmarking between products in a store: If customers see the most expensive products at first, other products the further back will become less expensive. Alternatively, prices of products in the further back seem to be comfortable to customers, which might cause them to purchase those popular products.

Moreover, consumers are motivated by a comparison of the price level of a good to a reference price. A reference price a price with which other prices are compared. Their more popular and better-selling items are put further back because the demand for these goods are already built and their most expensive products right in the entryway of the store, where consumers will see them first Consumers are motivated by comparing the price level with a

QUESTION 4 Imperfect markets O a. occur when the buyer or seller has an influence on the price. O b. can't occur if there are many buyers and many sellers. c. always result in demand exceeding supply. O d. always result in supply exceeding demand.One drawback to advertising might be that it could easily (1) cause a monopolistically competitive firm to become a monopoly. 2) raise revenue but not increase demand. 3) decrease revenue and raise demand. (4) decrease costs and decrease demand. 5) raise costs but not increase demand. Question 13 (2 points) Product differentiation 1) is a common characteristic of a perfectly competitive market structure. 2) refers to firms' attempts to make real or apparent differences in essentially substitutable products look different in the minds of consumers. 3) refers to firms' attempts to make their products look the same as other products in the industry. 4) is employed only in a monopoly market structure. 5) refers to the advantage big firms have in research and developmentInterpret elasticity of demand Question Suppose that a product's price p and the quantity demanded m are related through the pricedemand equation 3 -l 4001) = 8,000. It can be shown that demand is inelastic forp