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AMA PCM Exam - Topic 1 Question 2 Discussion

EZ, a manufacturer of electronic appliances, manufactures sandwich toasters, waffle makers, and sandwich-waffle makers. Recently, EZ reduced the price of sandwich-waffle makers by 20%. This increased the sales of sandwich-waffle makers by 20% and reduced the sale of sandwich toasters by 30% and waffle makers by 25%. Which of the following is true of this scenario?
D) Sandwich-waffle makers and sandwich toasters are likely to be substitute products.
A) The price elasticity of sandwich-waffle makers is -2.
B) The cross-price elasticity of sandwich-waffle makers and sandwich toasters is -1.
C) The cross-price elasticity of sandwich-waffle makers and waffle makers is -2.
E) Sandwich-waffle makers and waffle makers are complementary products.

AMA PCM Exam - Topic 1 Question 2 Discussion

Actual exam question for AMA's PCM exam
Question #: 2
Topic #: 1
[All PCM Questions]

EZ, a manufacturer of electronic appliances, manufactures sandwich toasters, waffle makers, and sandwich-waffle makers. Recently, EZ reduced the price of sandwich-waffle makers by 20%. This increased the sales of sandwich-waffle makers by 20% and reduced the sale of sandwich toasters by 30% and waffle makers by 25%. Which of the following is true of this scenario?

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Suggested Answer: D

by Renea at May 08, 2022, 01:13 AM

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Lilli
8 months ago
The elasticity calculations seem off to me.
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Jennie
9 months ago
Totally makes sense, they’re substitutes!
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Lorriane
9 months ago
Wait, how can sales drop for toasters and waffle makers at the same time?
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Mammie
9 months ago
Sales of sandwich-waffle makers went up by 20%!
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Estrella
9 months ago
Sandwich-waffle makers had a price drop of 20%.
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Tamar
9 months ago
I remember discussing RBI in class, and I believe it's based on sound risk assessment and management principles. That's my best guess, so I'll select option A.
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Adela
10 months ago
Ah, I see. If RSVP-TE is used for I-PMSI, then BGP must be used for signaling customer multicast information, per option C. Good to know!
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