Exam 19: Pricing Concepts

Define elasticity of demand and compare and contrast the three types of demand: elastic,inelastic,and unitary.What would the demand curve for elastic and inelastic demand look like when graphed?

Revenue:

When consumers are sensitive to price changes,_____ occurs.

A cost that changes with the level of output is called a(n)_____ cost.

Pet's Eye View Digital Camera is a small,durable digital camera that pet owners can clip to their pets' collars.A programmable timer takes pictures every few minutes,recording a photographic diary of the pet's day.The camera sells for $25.The average variable cost for each camera is $10 and the total annual fixed costs for plant operation are $45,000.What is the break-even point in units?

Your Memory Lane creates custom art prints that use graphs and icons in a street scene to commemorate special occasions.Suppose that Your Memory Lane has priced its product at $350 per print.Further,it has determined that the company's fixed cost is $12,500,with average variable costs per print of $250.What is the fixed cost contribution per print?

American Girl Doll The American Girl catalog began as a concept to introduce today's girls to those who lived in the past.Each historically accurate doll is carefully crafted and dressed and has books to describe her life.For example,Kristen is an 1854 pioneer girl who is growing up in Minnesota.Her story begins with her long sea voyage from Sweden.The basic doll,dressed in a calico dress and striped apron plus the hardcover story of how she got to Minnesota,costs $90.00.Six more hardback books of Kristen's life are available for $74.95.Kristen's nightgown costs $20.00,and a matching one for the doll owner is an additional $38.00.Buy both together and the price is only $50.00.A hand-painted wooden bed and trunk for Kristen are available for $213.00.Shipping costs vary with the price of the merchandise ordered. -Refer to American Girl Doll.The popularity of the American Girl dolls is so great that an increase in the price of the basic Kristen doll and books by 5 percent will not significantly affect the demand for the product.The means that the demand for the American Girl doll is:

As products enter the growth stage of the product life cycle,prices generally begin to stabilize.

Last quarter,Abingdon Company sold 1,000 decorative decals for $1 each;Cedar Decaliania sold 200 decorative decals at $4 each;Creative Decals sold 500 decals at $2 each;and Donnelly,Inc.sold 300 decals for $4 each.Assuming that the four companies are the only firms competing in the decorative decal market,calculate unit and dollar market share for each company for last quarter.For each company,which market share figure might be used in an advertisement for that company?

An office supply store can buy a desk for $300.If the store owner sells the desk for $450,what is the markup based on the selling price?

Most demand curves slope:

Smelly Fruit At first glance,there is little to like about the durian.The durian is a fruit popular in Thailand that is spiky outside and stinky on the inside.When confronted with the durian for the first time,the Wall Street Journal recently reported that westerners often describe its distinctive sulphurous smell with words like stinky socks and manure.However,the durian is so popular in Thailand that one variety of the durian fruit,called the Kan Yao,has been selling for as high as $200.Even at that price,supply of the Kan Yao cannot keep up with demand.There are approximately 30 varieties of the durian grown in Thailand,with the most plentiful selling in the $15 range.The yellow flesh of the durian,the part you eat,has very powerful smell but possesses a sweet,nutty taste that Thais cannot seem to get enough of at any price. -Refer to Smelly Fruit.Over the past two years,the price for Kan Yao durian fruit has increased by 50 percent.If the amount sold has remained almost constant,we would say that demand is:

Which of the following statements about pricing strategies throughout the product life cycle is NOT true?

When goods and services are exchanged,the trade is called:

The only way to maximize profits is to reduce costs by operating more efficiently.

Tesla Motors "Going green" doesn't have to be boring.The Tesla Roadster Sport is an electric car that goes from 0 to 60 in four seconds and drives more like a race car than an environmentally friendly ride.But that level of performance will set you back $128,500.As of 2009,Silicon Valley-based Tesla Motors,Inc.was the only company offering highway-compatible electric cars.Most Roadster Sport buyers are car enthusiasts and are buying them for the "fun toy" aspect of having an electric car rather than for environmental reasons. -Refer to Tesla Motors.The price of the Roadster was set so that total revenue was as large as possible relative to total costs.This represents a _____ approach.

When many substitute products are available,demand is inelastic.

Mitch owns a pet boarding kennel.The monthly payment on the land he purchased for his kennel,the mortgage on his small office building,and his business license are all examples of _____ costs.

_____ is the extra revenue associated with selling an additional unit of output.

Demand for which of the following products or services is most likely inelastic?