Exam 16: Pricing Concepts

What is the extra revenue associated with selling an additional unit of output?

What is the change in total costs associated with a one-unit change in output?

Imagine you're planning an after-symphony fund-raising party,and you need a life-size grand piano cake.Or you are a developer proposing a new shopping centre to a group of investors,and you want to serve a cake shaped like an architectural rendition of the centre.Is this impossible? No,you just need to contact Cecilia Villaveces Cakes.She actually built a life-size grand piano cake for a gala in Toronto.You can expect to pay anywhere from $75 to $10,000 for one of Cecilia's creations,depending on complexity of design and size.She uses only the best ingredients,and no two cakes are ever quite alike. -Refer to Specialty Cakes.There are many occasions for which people may need to buy a cake,but most people do not have the time or interest to learn about cakes and their bakers.These people who do not know about the quality of the Cecilia Villaveces Cakes might choose them for which reason?

As a product moves through its life cycle,the demand for the product and the competitive conditions tend to change.For each stage in the product life cycle,discuss pricing strategies appropriate for that stage.

If the formula for elasticity results in a measure of elasticity (E)equal to 1,the increase in sales exactly offsets the decrease in price so that total revenue remains the same.

What is a cost that changes with the level of output?

During sporting events at the local high school,Megan runs a concession stand.The costs associated with the purchase of hot dogs,mustard,relish,ketchup,chips,sodas,paper napkins,and cups are all examples of what type of costs?

Chulo Ibsen makes and sells hand-forged wrought iron fireplace screens for $125 each.He has determined that his fixed costs are $8,000,and his variable costs per firescreen are $45. -Refer to Fireplace Screens.What is Ibsen's break-even point in units?

Name two advantages and two disadvantages associated with the use of break-even analysis.

List three factors that affect elasticity of demand.Briefly describe how each affects demand.

What measures the overall effectiveness of management in generating profits with its available assets?

When consumers are sensitive to price changes,which of the following occurs?

Monthly output at Vincent Sheds and Outbuildings changed from 15 to 16 outdoor storage buildings,and the total costs changed from $27,000 to $28,500.What was the marginal cost for the company?

Trident makes luxury bicycles.Its target market has been people who willingly pay $1,000 or more for their bicycles,and it acknowledges that its prices are high.Trident has lowered prices to target customers who want a good bike but who can't or won't spend $1,000 for one.Trident is most likely using what type of pricing objective?

Which way do most demand curves slope?

Imagine you're planning an after-symphony fund-raising party,and you need a life-size grand piano cake.Or you are a developer proposing a new shopping centre to a group of investors,and you want to serve a cake shaped like an architectural rendition of the centre.Is this impossible? No,you just need to contact Cecilia Villaveces Cakes.She actually built a life-size grand piano cake for a gala in Toronto.You can expect to pay anywhere from $75 to $10,000 for one of Cecilia's creations,depending on complexity of design and size.She uses only the best ingredients,and no two cakes are ever quite alike. -Refer to Specialty Cakes.Which of the following is the BEST example of a fixed cost for Cecilia Villaveces Cakes?

The Canadian Girl catalogue began as a concept to introduce today's girls to girls 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 Manitoba.Her story begins with her long sea voyage from Iceland.The basic doll dressed in a calico dress and striped apron plus the hardcover story of how she got to Manitoba costs $90.Six more hardback books of Kristen's life are available for $74.95.Kristen's nightgown costs $20,and a matching one for the doll owner is an additional $38.Buy both together and the price is only $50.A hand-painted wooden bed and trunk for Kristen are available for $213.Shipping costs vary with the price of the merchandise ordered. -Refer to Canadian Girl Doll.Which of the following factors is most likely to affect the elasticity of demand for the doll?

A firm develops a satisfactory product/service,evaluates the total expense of the product/service,and sets a price that covers all expenses and a target profit.This type of pricing is product/service driven.What is being described?

The pricing policy used by Middleton Industries,manufacturer of Renaissance charms for bracelets and necklaces,is to set prices so that its retail prices are as high as the market will tolerate.Additionally,Middleton strives to keep its costs at an industry low by using silver and gold overlays over charms made of cheap base metal.This is an example of what type of policy?