Question 1

Demand for a business product is ____ when two or more items are used in combination to produce a product.

Accepted Answer

When two or more items are used in combination to produce a product, the demand for those items is called joint demand. This is because the demand for each item is tied to the demand of the whole product that they are used to create. For example, the demand for flour and sugar is joint when they are both used to make a cake.

Question 2

When a business is making its initial purchase of an item to be used to perform a new job, it is known as a ____ purchase.

Accepted Answer

A new-task purchase is when a business is making its initial purchase of an item to be used to perform a new job, project, or contract. This type of purchase involves a higher level of decision-making and evaluation because the business has no prior experience with the item being purchased.

Question 3

Inelastic demand simply means that

Accepted Answer

Inelastic demand means that a change in price will not significantly affect the demand for a product. This is because the product is either a necessity or there are no close substitutes available. Therefore, buyers are less sensitive to the price changes and will continue to purchase the same quantity even with price fluctuations.

Question 4

When certain consumer products are in high demand, producers might buy extra materials and equipment and when demand subsides, producers will cut back on their material purchases. This describes ____ demand.

Accepted Answer

Fluctuating demand refers to demand that varies depending on the specific circumstances, such as consumer preferences, economic conditions, or seasonal changes. In this scenario, producers adjust their material purchases based on fluctuations in demand.

Question 5

All of the following describe the demand for business products except

Accepted Answer

The answer of All of the following describe the demand...

Question 6

Christoff's Lawn & Lot is a small business that provides landscaping and grass cutting services in the spring and summer. Christoff's usually contracts with customers on an annual basis, with the terms set out at the beginning of the season. This year, the area experienced a significant amount of rain, causing the grass to grow more quickly. Christoff's was required to cut the grass every time it grew 2 inches, and no matter how many times it needed cutting, the customer paid the same monthly amount based on the original contract. The price of gas has now grown by 35% causing Christoff's to pay more for their supplies. The demand for gas despite its price represents ________ demand for Christoff's Lawn & Lot.

Accepted Answer

The demand for Christoff's services is likely inelastic as the customer is paying a fixed monthly fee regardless of how much grass needs to be cut. This suggests that the customer values the consistent lawn care provided by Christoff's and is willing to pay the same amount even if the cost of supplies (i.e. gas) goes up. The fact that the customer pays a fixed amount also suggests that the demand is not separate (i.e. each service is not priced separately), but rather joint (i.e. the customer is paying for a bundle of services). The demand is also not likely to be derived, as the demand for landscaping and grass cutting services is not dependent on the demand for any other product or service.

Question 7

Safeway Supermarkets recently placed an order with the Kahn Corporation for hotdogs. The typical weekly order is for 10 cases; however, since the upcoming weekend includes a holiday, this time Safeway is ordering 100 cases of hotdogs. Safeway orders this product on a regular basis. What type of purchase does this week's purchase represent?

Accepted Answer

The answer of Safeway Supermarkets recently placed an order with...

Question 8

Perry Supply's sales and sales force have continued to expand. Now, the firm plans to add a fleet of company cars as part of its sales compensation package. For Perry Supply, these vehicles would represent a ____ purchase.

Accepted Answer

Adding a fleet of company cars as part of the sales compensation package is a new and significant decision for Perry Supply, which falls under the new-task purchase category.

Question 9

Anderson Distribution Company has purchased 15 forklifts over the past two years. As it plans to place its next order for another five machines, management wonders if additional features may be needed in order to handle changes in the product lines it carries. For Anderson, these new forklifts represent a ____ purchase.

Accepted Answer

As Anderson Distribution Company is considering additional features to handle changes in its product lines, this indicates that they are not making an identical purchase to their previous purchases of forklifts. Therefore, this purchase is a modified rebuy.

Question 10

King Auto Supply sells car and truck parts, as well as tire replacement and balancing services. As King places its order for truck tires with Michelin, it must also place an order for valve stems and balancing weights for the tires. Such business products are characterized as having ____ demand.

Accepted Answer

Valve stems and balancing weights are joint products that are typically ordered with truck tires, and their demand is dependent on the demand for truck tires.

Question 11

Inelastic demand in business markets refers to a situation where

Accepted Answer

Inelastic demand means that changes in price will not have a significant impact on the quantity demanded. This could be because the product is a necessity or because there are few substitutes available. Therefore, demand does not fluctuate significantly over time.

Question 12

Demand for business products is also known as ____ demand.

Accepted Answer

The answer of Demand for business products is also known...

Question 13

Most business purchases can be classified as belonging to one of three types:

Accepted Answer

The three types of business purchases are modified rebuy, new-task, and straight rebuy. Delinquent, repetitive, delivered, and reciprocal are not commonly-used classifications. Delayed and rebuy are not specific enough to be considered types of business purchases.

Question 14

Goodyear is a manufacturer and marketer of tires for new passenger cars. In recent years, the company's business has declined because of the overall decrease in consumer demand for new cars. In this case, the demand for Goodyear's tire products is said to be ____ since it depends on the demand for new cars.

Accepted Answer

The demand for Goodyear's tire products is said to be derived since it depends on the demand for new cars.

Question 15

A representative from Coca-Cola stops by at a local fast-food restaurant once a month to inquire how much soft drink syrup the store will need. The restaurant's orders are an example of which type of business purchase?

Accepted Answer

The restaurant's orders are an example of a straight rebuy, as they are making routine purchases of the same product from the same supplier without any significant changes or modifications to the purchase process.

Question 16

The United States Navy purchases uniforms from a single supplier. For the last twenty-five years, the trousers purchased from this supplier have not changed and have been bought every six months, in seven different sizes. This example is called a

Accepted Answer

A straight rebuy is a routine purchase of the same products under approximately the same terms. The Navy's consistent purchase of the same trousers from the same supplier fits this description.

Question 17

In placing a tire order with Michelin, South Side Industrial Supply finds that the truck tires it is ordering have increased $37.50 in price since the last order. South Side proceeds with the order, confident that it can pass on the price increase to future customers. This is an example of business products having ____ demand.

Accepted Answer

The fact that South Side Industrial Supply is confident about passing on the price increase to future customers suggests that the demand for the business products (truck tires) is inelastic, meaning that customers are less sensitive to price changes and are willing to pay more for the product.

Question 18

The Eagle Pawn Company is a regional business that owns seven pawn stores in the Houston area. The owners of Eagle Pawn have recently purchased a new software system designed to better track their inventory. Now that they have had the system for a couple of months, they have decided to upgrade to a newer version. The original purchase is an example of a(an) ________, while the current purchase will be a(an) _____.

Accepted Answer

The original purchase of the software system represents a new task, as it was a new requirement for the business. The decision to upgrade to a newer version of the software is a modified rebuy, as it involves revisiting and modifying an existing purchase decision.

Question 19

The fact that business customers purchase products to be used directly or indirectly in the production of goods and services to satisfy customers' needs means that demand for business products is

Accepted Answer

Demand for business products is derived from the demand for consumer goods and services. This means that the demand for business products is dependent on the demand for the products and services that they will be used to produce. Thus, it is derived demand.

Question 20

Demand for business products is characterized as derived. From what is the demand derived?

Accepted Answer

The demand for business products is derived from the demand for consumer products, as businesses purchase goods or services to produce other goods or services that consumers ultimately buy.

Quiz 8: Business Markets and Buying Behavior