Brad always buys and uses Nike brand golf balls.If he finds a Titleist or Callaway ball in the rough,he gives it away.Brand-loyal golfers like Brad allow Nike to charge a higher price and not lose many sales.By building a strong brand,Nike has effectively
A) increased the income effect for its products.
B) increased the cross-price elasticity for its products.
C) focused on the competitive parity point for its products.
D) shifted the golf ball market from a monopoly to pure competition.
E) reduced the price elasticity of demand for its products.

Question

Quizplus · Accepted Answer

Brand-loyal customers like Brad are less sensitive to changes in price and therefore have a lower price elasticity of demand. By building a strong brand, Nike has reduced the price elasticity of demand for its products, allowing them to charge a higher price without losing many sales.

Brad Always Buys and Uses Nike Brand Golf Balls