Different Brands Within a Company's Product Line Generally Have Different

Multiple Choice

Different brands within a company's product line generally have different profit margins; for example, items with higher price lines have higher profit margins. Assume that Nike Variety tennis shoes have variable costs of $6 and sell for $24. Also assume that Nike Wimbledon tennis shoes have variable costs of $38 and sell for $48, but when fixed overhead is added, the shoe is unprofitable by $2 per pair. Which statement is most accurate regarding Nike's pricing approach with these two product lines?

A) Demand for each shoe line is unrelated to price.
B) Nike is using a cost-plus-percentage-of-cost pricing strategy.
C) Nike is using a product-line pricing strategy.
D) Demand for each shoe line is unrelated to product quality.
E) Consumers do not use price as an indication of quality.