Factors Affecting Product Pricing in Business
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Questions and Answers

What is the ideal price point in economic theory?

  • The price that is the same as the competitors
  • The lowest price possible
  • The highest price the market will bear
  • The equilibrium point where the quantity supplied equals the quantity demanded (correct)

    • What is the main limitation of cost-plus pricing?

  • It is too complex to calculate
  • It does not take into account consumer views (correct)
  • It only works for small businesses
  • It takes into account consumer views

    • What is the purpose of penetration pricing?

  • To compete with similar products
  • To get a product established on the market (correct)
  • To make a high profit immediately
  • To reduce production costs

    • What is an example of non-price competition?

    <p>Offering a free gift with purchase</p> Signup and view all the answers

    What is the goal of competitor-based pricing?

    <p>To charge a similar price to competitors</p> Signup and view all the answers

    What may happen to the price of a product after it has been established on the market using penetration pricing?

    <p>It will increase</p> Signup and view all the answers

    What is a potential consequence of using a penetration pricing strategy?

    <p>A price war among competitors</p> Signup and view all the answers

    What is the purpose of a loss leader?

    <p>To attract customers to buy other products at normal prices</p> Signup and view all the answers

    What is the main advantage of price discrimination?

    <p>Selling the same product at a range of different prices to suit different consumers</p> Signup and view all the answers

    What is creaming or skimming?

    <p>A pricing strategy used for new products</p> Signup and view all the answers

    What is the goal of a business that uses a loss leader strategy?

    <p>To attract customers to buy other products at normal prices</p> Signup and view all the answers

    What is an example of price discrimination?

    <p>Selling a product at a lower price to students</p> Signup and view all the answers

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