Ch 18 Price setting in Business World

Question 1

a dollar amount added to the cost of products to get the selling price

Answer 1

markup

Question 2

means percentage of selling products that is added to the cost to get the selling prices

Answer 2

Markup (percent)

Question 3

the sequence of markups firms use at different levels in the channels- determines the price structure in the whole channel

Answer 3

markup chain

Question 4

the # of times the average inventory is sold in a year

Answer 4

Stockturn rate

Question 5

means adding a reasonable markup to the average cost of a product

Answer 5

average-cost pricing

Question 6

is the sum of those cost that are fixed in total- no matter how much is produced

Answer 6

total fixed cost

Question 7

the sum of those changing expenses that are closely related to output- expenses for parts, wages, materials, etc

Answer 7

total variable cost

Question 8

the sum of total fixed and variable cost

Answer 8

total cost

Question 9

is obtained by dividing total cost by related quantity

Answer 9

average cost (per unit)

Question 10

obtained by dividing total fixed cost by the related quantity

Answer 10

average fixed cost (per unit)

Question 11

obtained by dividing total variable cost by the related quantity

Answer 11

average variable cost (per unit)

Question 12

adding a target return to the cost of the product- has become popular in recent years

Answer 12

Target return pricing

Question 13

evaluated whether the firm will be able to break even- that is cover all its cost- with a particular price

Answer 13

break-even analysis

Question 14

the quantity where the firm’s total cost will just equal its total revenue

Answer 14

break-even point (BEP)

Question 15

the assumed selling price per unit mines the variable cost

Answer 15

Fixed cost (FC) contribution per unit

Question 16

focuses on the changes in total revenue and total cost from selling one more unit to fine the most profitable price and quantity

Answer 16

marginal analysis

Question 17

is the change in total revenue that results from the sale of one more unit of a product

Answer 17

marginal revenue

Question 18

is the change in total cost that results from the sale of one more unit of a product

Answer 18

marginal cost

Question 19

the highest profit is earned at the price where marginal cost is just less than or equal to marginal revenue

Answer 19

rule of maximizing profit

Question 20

the extra profit on the last unit- is near zero

Answer 20

marginal profit

Question 21

usually sets a price for all to follow, perhaps to maximize profits or to get certain target return on investment

Answer 21

price leader

Question 22

means setting prices that will capture some of what customers will save by substituting the firm’s product for the one currently being used

Answer 22

value in use pricing

Question 23

the price the expect to pay- for many of the products the purchase

Answer 23

reference price

Question 24

means setting some very low prices- real bargains- to get customers into retail stores

Answer 24

leader pricing

Question 25

is setting some very low prices to attract customers but trying to sell more expensive models or brand once the customer is in the store

Answer 25

bait pricing

Question 26

setting prices that have special appeal to target customers

Answer 26

psychological pricing

Question 27

is setting prices that end in certain numbers

Answer 27

odd-even pricing

Question 28

setting a few price levels for a product line and then marketing all items at these prices

Answer 28

price lining

Question 29

setting an acceptable final consumer price and working backward to what a products can charge

Answer 29

Demand-backward pricing

Question 30

setting a rather high price to suggest high quality or high status

Answer 30

prestige pricing

Question 31

setting prices for a whole line of products

Answer 31

full-line pricing

Question 32

setting prices on several products as a group

Answer 32

complementary product pricing

Question 33

offering a specific price for each possible jab rather than setting price that applies for all customers

Answer 33

bid pricing

Question 34

price set based on bargaining between the buyer and seller

Answer 34

negotiated price

Question 35

Setting one price for a set of products

Answer 35

Product-bundle pricing