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Expense report memo from SuperStudios Purchasing Dept. You requested

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This is a tricky question, OA has been posted in the question.

Question #1

No, Yes, and No

Question #2

False, True, and True.

ktzsikka and yashikaaggarwal both of you got question 1 incorrect, for question #2 I suppose your No means False and Yes means True. If this is the case your second question is correct. I will post OE shortly.

Thank you
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Official Explanation

1. Consider the statements below. Can each statement be inferred from the information given?

In a saturated market, products with comparable technological features and of the same quality will have prices which vary greatly.

According to what the note states about classical economics, retailers will meet or beat competitors' prices if consumers don't see a difference in quality, so the prices should be roughly the same. Therefore, the answer is no, this inference is not supported.

The company should try to differentiate its product by emphasizing its unique features in order to increase market share.

According to the marketing department and classical economists, customers who believe the LSX-300 is of the same quality as competitors' products will not pay the higher price for it. The company has to either lower prices or differentiate its product. Since the president says that a reduction in price is not reasonable, the only way to increase market share is to change customer perception and make them think that the LSX-300 is superior. So yes, this inference is supported.

Consumers who believe the features of two different products to be comparable will believe that the higher-cost LSX-300 is better in quality.

Consumers who believe two products are comparable don’t have any reason to believe that the LSX-300 is better in quality because it is more expensive. So no, this inference is not supported.

2. Consider the statements below. Indicate whether each statement is true or false based on the president's note and the accompanying table.

Market share percentage data for the years 1990 through 2005 is a linear function with a positive slope.

Market share percentage increases every year from 1990 through 2001, but then it decreases after that, so the graph of this data would not be linear and would not have a constant positive slope. Therefore, this statement is false.

The line of best fit for sales data for the years 1990 through 2005 is a linear function with a positive slope.

Sales data keeps increasing steadily so the line of best fit for this data would have a positive slope. This statement is true.

The slope of the function representing retail price from 2001 through 2005 is zero.

Retail price stays the same from 2001 through 2005, which means a line graphed to represent this data during those years would have a slope of zero. This statement is true.

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