Many consumers are willing to pay $100 for a perfume that contains $10 worth of scent because the perfume is from a well-known brand. What kind of a pricing is the company depending on?
a) Going-rate pricing
b) Image pricing
c) Market-skimming pricing
d) Target pricing
A manufacturer has invested $750,000 in a new product and wants to set a price to earn a 15 percent ROI. The cost per unit is $18 and the company expects to sell 50,000 units in the first year. Calculate the company’s target-return price for this product.
__________ cost is the cost per unit at that level of production.
When a company introduces a product at a very high price and then gradually drops the price over time, it is pursuing a __________ strategy.
a) market-penetration pricing
b) market-skimming pricing
d) switching cost
The decline in the average cost of production with accumulated production experience is called the:
a) demand curve.
b) supply chain.
c) learning curve.
d) value chain.
If demand changes considerably with a small change in price, the demand is said to be:
a) unit elastic.
Costs that differ directly with the level of production are known as _____ costs.
A market-penetration pricing strategy is most suitable when:
a) a low price slows down market growth.
b) production and distribution costs fall with accumulated production experience.
c) a high price dissuades potential competitors from entering the market.
d) the market is characterized by inelastic demand.
Companies that believe that a higher sales volume leads to lower unit costs and higher long-run profits are attempting to:
a) maximize their market share.
b) skim the market.
c) become a product-quality leader.
d) merely survive in the market.
A company must make payments each month for rent, heat, interest, and salaries. These are _____ costs.
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