Exam 14: Pricing Concepts for Establishing Value

When the price for Blu-ray players dropped, the demand for DVD players went down, so DVD players and Blu-ray players are

Assume the demand for electricity, a necessity with few substitutes, is −0.2. If the electric company raised its rates by 10 percent, we would expect a

Traditional demand curve economic theory is used by marketers to understand ________ in the five Cs of pricing.

Raymond estimates that the fixed costs associated with opening a new bank branch are $500,000. He expects the branch to attract 1,000 new customer accounts in the first year, each of which will cost $50 per year to service. He also expects to generate $100,000 per year in revenue. For Raymond, the total cost of opening the new branch and remaining open for one year will be

Frank's Heating and Air Conditioning Company specializes in electric heat pumps. Frank keeps track of the price of natural gas, knowing that

A ________ strategy involves accurately measuring all the factors needed to predict sales and profits at various price levels, so that the price level that produces the highest return can be chosen.

What situation is occurring if a 1 percent decrease in price results in more than a 1 percent increase in quantity demand?

Jason rents rooms in his hotel for an average of $100 per night. The variable cost per rented room is $20. His fixed costs are $100,000 and his target profit is $20,000. For Jason, to earn his target profit, he will need to rent out ________ rooms.

Rarely is the lowest-price product offering the dominant brand in a given market.

Margaret has been invited to a fancy dinner party and wants to bring a good bottle of wine as a gift for the host. Since she does not know much about wine, she will likely use the price of the wines as

A reference price is

Explain the concept of the high/low strategy. Why is this an attractive strategy to marketers?

A study found that, among addicted smokers, a 10 percent increase in the price of cigarettes resulted in a 2 percent decrease in quantity demanded. For these consumers, cigarettes have a(n) ________ price elasticity demand.

Consider a bakery like Entenmann's: The majority of the ________ costs are the cost of the ingredients, primarily flour.

What does an everyday low pricing strategy convey to consumers?

David manages a Shoney's restaurant. He is considering staying open later in the evening. For David, the variable costs associated with staying open longer hours will include all of the following except

Karen initially charged $80 for an hour-long massage and averaged 20 clients per week. When she raised her price to $100, the number of massages decreased to 15 per week. What is the price elasticity of demand for her service?

A demand curve shows the relationship between income and demand.

How is consumer behavior affected by the "income effect"?

For which of the following is demand likely to be least sensitive to price increases?