24 Questions
What is the primary function of prices in terms of production?
To determine what goods are to be produced and in what quantities
According to Britannica.com, what does the price of a product represent?
The value of the product
What is the primary goal of effective revenue management?
To make better revenue management decisions than competitors
Why do restaurants charge high prices for wine despite having the potential to sell more at a lower price?
To maximize profits
What is the role of supply, demand, and costs in pricing?
They are three key factors affecting pricing
What are the three things that effective managers of an organization's revenues must do?
Understand revenue management, understand complex factors, and make better decisions
What is the underlying assumption when a sale is not made?
The purchaser did not believe the item was worth the seller’s asking price.
What is the main limitation of using supply and demand to determine prices in the hospitality industry?
The demand for hospitality products is difficult to measure.
What is the role of supply and demand in pricing according to the text?
To serve as a pricing guide.
What is an important consideration for Revenue Managers (RMs) in the hospitality industry?
Supply and demand should not be a major determinate of price, nor should costs.
Why is it unlikely that a Revenue Manager in the hospitality industry will create a supply and demand curve?
The demand for hospitality products is not easy to measure.
What is true about the role of costs in pricing?
There are many types of cost.
Why do restaurants charge more for wines compared to retail stores?
It costs the restaurant a lot in licensing, inventory, storage space, equipment, and staff training
What is a key assumption of consumer rationality?
Buyers consistently exhibit reasonable and purposeful behavior
What do effective RMs understand about buyers?
All rational buyers do seek to gain an increase in value
What is the relationship between sellers and prices in the 4Ps of the Marketing Mix?
Sellers are free to propose their prices, but buyers may not accept them
What do high-quality wines in a restaurant's selection imply for customers?
The chances of a guest making a mistake when purchasing a wine are greatly reduced
What does drinking wine with dinner add to the overall experience?
To the overall dining experience
What is the primary objective of activity-based costing?
To assign subjective costs to labor and management tasks
What type of cost increases as sales volume increases and decreases as sales volume decreases?
Variable cost
What is the pricing philosophy that involves summing product costs with a desired profit to arrive at an item's selling price?
Cost-plus pricing
What is the point at which a firm's revenues exactly equal its expenses?
Break-even point
What is the term for the revenue level required to achieve the break-even point within a specific time period?
Minimum sales point
What type of cost is an expense that remains constant despite changes in sales volume?
Fixed cost
Test your knowledge of strategic pricing, including the role of supply, demand, and costs in pricing decisions. Learn how to implement effective pricing strategies and measure the value of a product.
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