Question 2 (A-F)

A.) If Washburn Guitars were to lower the price of the Maya Pro DD75 to $2,499 from $2,699, sales of the guitar would increase 30%. This illustrates

a product with elastic demand.

an increase in the unit variable cost.

a product with inelastic demand.

a shift in the demand curve.

B.) Washburn Guitars makes signature series guitars to enhance the credibility of the Washburn brand. Creating signature series guitars would have a positive effect on all of the following EXCEPT:

brand loyalty.

unit variable cost.

brand awareness.

demand.

C.) If the mass-produced guitar sells 100,000 units annually at $175 per guitar, what is the total revenue?

$17,500,000

$175,000

$6,175,000

$1,750,000

D.) Washburn has 4 distinct price points for its guitar lines: entry, intermediate, professional, and collectors. Washburn has implemented a _______ pricing objective.

market share

unit volume

survival

social responsibility

E.) Washburns fixed costs for producing mass-produced guitars are $500,000. Its variable costs are $150 per guitar. If it prices these guitars at $250, what is the break-even quantity for this line?

1,500 guitars

1,000 guitars

2,500 guitars

5,000 guitars

F.) With the typical downward sloping demand curve like the one shown for Washburn, as price per unit falls, demand

increases.

decreases.

remains unchanged.

is minimized.