Theme 1.3.3

Question 1

competitive pricing

Answer 1

pricing strategies based on the prices charged by rivals

Question 2

cost plus pricing

Answer 2

adding a percentage (the mark-up) to the costs of producing a product to get the price

Question 3

mark-up

Answer 3

the percentage added to unit cost that makes a profit for a business when setting the price

Question 4

penetration pricing

Answer 4

setting a low price when launching a new product in order to get established in the market

Question 5

predatory pricing

Answer 5

setting a low price forcing rivals out of business

Question 6

pricing strategy

Answer 6

the pricing methods used by business when deciding what to charge for its products

Question 7

product life cycle

Answer 7

shows the different stages in the life of a product and the sales that can be expected at each stage

Question 8

psychological pricing

Answer 8

setting the price slightly below a round figure e.g. £3.99

Question 9

skimming

Answer 9

setting a high price initially and then lowering it later

Question 10

unit costs

Answer 10

the same as average cost

Question 11

formula for unit costs

Answer 11

total cost/output