12 Questions
Price changes should always be made if the expected increase in volume will overcome the volume hurdle.
False
Fixed costs play a significant role in marginal price change decisions.
False
Elastic markets tend to favor price cuts to improve profitability.
True
Inelastic markets are more likely to benefit from price increases to improve profitability.
True
Category-Level switching is easier than brand-level switching according to consumer behavior.
False
Brand level elasticity of demand is typically lower than industry level elasticity of demand.
False
Profit Sensitivity Analysis reveals the impact of a minor adjustment in quantity on profits.
False
Price changes affect profits only directly, not indirectly.
False
Economic Price Optimization involves identifying the price that minimizes profits.
False
Volume Hurdles represent the needed demand increase to validate a price increase and the allowable demand sacrifice to validate a price decrease.
True
A pure price change influences the variable and fixed costs but not the quantity sold.
False
If the volume hurdle exceeds the expected change in sales, then the new price cannot be justified.
True
Explore how a small change in price impacts profits and uncover volume hurdles. Understand the direct and indirect effects of price changes on profits, and how to quantify selling goals against the expectations of potential demand. This quiz helps in setting sales targets for price promotions and discount prices.
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