Question

c. stop advertising
d. eliminate products

1. a recession is best described as:

a. economic growth
b. economic stability
c. a period of economic slowdown
d. a rise in consumer spending

1. during a recession, consumers are more likely to:

a. spend freely
b. focus on luxury goods
c. be price-sensitive
d. ignore prices

1. buying power refers to:

a. advertising budgets
b. the amount of money consumers can spend
c. company profits
d. product supply

part ii: matching (1 point each)
match each term with the correct description.

1. supply __________ a. period of economic decline
2. inflation __________ b. increase in prices over time
3. recession __________ c. amount consumers want to buy
4. demand __________ d. amount businesses are willing to sell

part iii: short answer (3 points each)

1. explain how supply and demand affect pricing.

1. how does competition influence marketing strategies?

part iv: scenario-based questions (4 points each)

1. scenario:

a clothing brand notices rising production costs due to inflation.
a) name the economic factor affecting the company.

b) identify one marketing decision the company may change.

Explanation:

Multiple Choice Answers:

1. C. A period of economic slowdown
2. C. Be price-sensitive
3. B. The amount of money consumers can spend

Matching Answers:

1. Supply - D. Amount businesses are willing to sell
2. Inflation - B. Increase in prices over time
3. Recession - A. Period of economic decline
4. Demand - C. Amount consumers want to buy

Short Answer Explanations and Answers:

15.

When supply exceeds demand, sellers lower prices to clear surplus stock. When demand exceeds supply, scarcity lets sellers raise prices. Equilibrium price occurs where supply and demand are equal.

Competition pushes businesses to differentiate offerings, adjust pricing, improve marketing messaging, and enhance customer value to stand out.

The scenario explicitly states rising production costs stem from inflation, a core economic factor.

Answer:

If supply is higher than demand, prices decrease to sell excess goods. If demand is higher than supply, prices increase due to scarcity. The equilibrium price is set where the quantity supplied matches the quantity demanded.

16.