Exam 14: Pricing Concepts for Establishing Value

Raymond estimates the fixed costs associated with opening a new bank branch are $500,000.He estimates the branch will attract 1,000 new customers who will cost $50 / year to service each of their accounts.He also expects to generate $100,000 in fees annually from these accounts.What will be the total cost of opening the new branch and remaining open for one year?

At the break-even point,profits are maximized.

Diane owns a bakery where she sells cupcakes.Two blocks down there is another bakery,CC's Bakery,that sells cupcakes for $1 less than Diane.Diane decides to lower her price and match CC's Bakery prices.What type of pricing strategy is Diane implementing?

The commercial airline industry is considered what type of market?

The more substitutes that exist in a market,

What is predatory pricing? What federal acts make it illegal? How are consumers hurt by predatory pricing?

If a firm in a purely competitive market can differentiate its product or service,it becomes part of a(n)_______ market.

In general,prices should not be based on costs because

When firms set prices similar to those of competitors,they are following a strategy of

The demand curve for prestige products generally slopes downward due to higher prices.