Chapter 18

Question 1

What is a Barter ?

Answer 1

the trading of products

Question 2

What is Price Competition?

Answer 2

and matching or beating competitor’s prices

Question 3

What is non-price competition?

Answer 3

Characteristics other than price to distinguish a product from competitive brands

Question 4

What is the formula for profit and profits

Answer 4

• Profit = T. revenue - T. Cost

- Profits = (Price x Quantity sold) - T. Costs

Question 5

What is Markup?

Answer 5

is the difference between the cost of a good and its selling price

Question 6

What is Price Elasticity of demand?

Answer 6

a measure of the sensitivity of demand to changes of price

Question 7

What is an elastic demand?

Answer 7

A change in price causes an opposite change in QD

Question 8

What are some Elasticity Determinants?

Answer 8

• Availability of substitutes
• Percentage of income
• Necessity
• Time
• Brand Equity

Question 9

What is an Break-Even Point?

Answer 9

• Where costs of producing a product equal the revenue

Question 10

What is Marginal Analysis?

Answer 10

Examines what happens to a firm’s costs and revenues when production or sales volumes changes by one unit

Question 11

What is Marginal Cost?

Answer 11

is extra cost incurred for producing one more unit of product

Question 12

What is Marginal Revenue?

Answer 12

change in total revenue when a firm sells one additional unit of product

Question 13

What is the formula for Average Fixed Costs?

Answer 13

Fixed Costs/Units Produced

Question 14

What is the formula for Average Variable Costs?

Answer 14

Variable Costs/Units Produces

Question 15

What are some reference Prices?

Answer 15

• Internal and external reference price

Question 16

What is Reference Price?

Answer 16

The price stored in memory that helps to evaluate the actual price

Question 17

What is Internal Reference Price?

Answer 17

Develops in buyer’s mind through experience with product

Question 18

What is External Reference Price?

Answer 18

A comparison price provided by others

Question 19

What is Price Framing? EX

Answer 19

• Anchoring price for consumers

- MSRP, Competitiors Price, “You Save”

Question 20

What is Bundling ?

Answer 20

Offering several products for sale in one “package”

Question 21

What are some Price strategies?

Answer 21

• Framing
• Bundling
• Unbundling

Question 22

Which are some Pricing Objectives?

Answer 22

• Sales Oriented

- Profit oriented

Question 23

What is Sales Oriented?

Answer 23

Set prices low to maximize sales

Question 24

What is Profit Oriented?

Answer 24

Pricing strategy focused on profits

Question 25

What is target profit pricing?

Answer 25

All products must have at least a 10% profit marging

Question 26

What is Maximize profits?

Answer 26

Use sophisticated mathematical models to maximize profits

Question 27

What is customer oriented?

Answer 27

focused on providing value

Question 28

What some general pricing Strategies?

Answer 28

Skimming, Penetration, Neutral

Question 29

What is skimming useful with? Ex?

Answer 29

- Useful with inelastic demand, early life cycle stage | - Consulting, Health Care

Question 30

what is Penetration useful with? Ex?

Answer 30

- Useful with elastic elastic demand | - Fast food