Exam (elaborations)
Ch. 10
Exam of 6 pages for the course Ch. 10 at Ch. 10 (Ch. 10)
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Ch. 10Price - ANS-amount of something- money, time, or effort- that a buyer exchanges with a
seller to obtain a product
Revenue - ANS-results of the price charged to customers multiplied by the number of
units sold
Profits - ANS-revenue minus total costs
Profit maximization - ANS-pricing objective that involves setting a relatively high price
for a period of time after the product launches
Volume maximization - ANS-pricing objectives that involves setting prices low to
encourage a greater volume of purchases. Also called penetration pricing
Survival pricing - ANS-pricing objective that involves lowering prices to the point at
which revenue just covers cost, allow the firm to endure during a difficult time
Marginal revenue - ANS-change in total revenue that results from selling on additional
unit of product
Marginal cost - ANS-change in total cost that results from producing on additional unit of
product
Price sensitivity - ANS-degree to which the price of a product affects consumers
purchasing behavior
Price elasticity of demand - ANS-measure of price sensitivity that gives the percentage
change in quantity demanded in response to a percentage change in price
Inelastic demand - ANS-demand in which the given percentage change in price results
in a smaller percentage change in quantity demand
Elastic demand - ANS-demand for which a given percentage change in price result in
an even larger percentage change in quantity demanded
Fixed costs - ANS-costs that remain constant and do not vary based on the number of
units produced or sold
, Variable cost - ANS-costs that vary depending on the number of units produced or sold
Break- even analysis - ANS-process of calculating the break- even point, which equals
the sales volume needed to achieve a profit of zero
Break- even point - ANS-point at which the costs of producing a product equal the
revenue made from selling the product
Reference prices - ANS-prices that consumers consider reasonable and fair for a
product
Underpricing - ANS-charging someone less than they are willing to pay
Unbundling - ANS-separating out the individual goods, services, or ideas that make up
a product and pricing each one individually
Escalator clause - ANS-section in a contract that provide for price increases if certain,
specified conditions occur
Markup pricing - ANS-pricing method in which a certain amount is added to the cost of
the product, to set the final price
Profit margin - ANS-the amount a product sells for above the total cost of the product
itself
Odd pricing - ANS-pricing tactic that in which a firm prices products a few cents below
the next dollar amount
Even pricing - ANS-pricing tactic that sets prices at even dollar amounts
Prestige pricing - ANS-pricing tactic that involves pricing a product higher than
competitors to signal that it is of higher quality
Loss- leader pricing - ANS-pricing tactic that involves selling a product at a price that
causes the firm a financial loss
Seasonal discounts - ANS-price reduction given to customers purchasing goods or
services out of season
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