Chapter 13 Vocab

Question 1

Average Revenue (AR)

Answer 1

The average amount of money received for selling one unit of a product, or simply the price of that unit.

Question 2

Barter

Answer 2

The practice of exchanging products and services for other products and services rather than for money.

Question 3

Break-even Analysis

Answer 3

A technique that analyzes the relationship between total revenue and total cost to determine profitability at various levels of output.

Question 4

Break-even Chart

Answer 4

A graphic presentation of the break-even analysis that shows when total revenue and total cost intersect to identify profit or loss for a given quantity sold.

Question 5

Break-even Point (BEP)

Answer 5

The quantity at which total revenue and total cost are equal.

Question 6

Demand Curve

Answer 6

A graph that relates the quantity sold and price, showing the maximum number of units that will be sold at a given price.

Question 7

Demand Factors

Answer 7

Factors that determine consumers’ willingness and ability to pay for products and services.

Question 8

Fixed Cost (FC)

Answer 8

The sum of the expenses of the firm that are stable and do not change with the quantity of a product that is produced and sold.

Question 9

Marginal Analysis

Answer 9

A continuing, concise trade-off of incremental costs against incremental revenues.

Question 10

Marginal Cost (MC)

Answer 10

The change in total cost that results from producing and marketing one additional unit of a product.

Question 11

Marginal Revenue (MR)

Answer 11

The change in total revenue that results from producing and marketing one additional unit of a product.

Question 12

Price

Answer 12

The money or other considerations (including other products and services) exchanged for the ownership or use of a product or service.

Question 13

Price Elasticity of Demand

Answer 13

The percentage change in quantity demanded relative to a percentage change in price.

Question 14

Pricing Constraints

Answer 14

Factors that limit the range of prices a firm may set.

Question 15

Pricing Objectives

Answer 15

Specifying the role of price in an organization’s marketing and strategic plans.

Question 16

Profit Equation

Answer 16

Profit = Total Revenue - Total Cost;
or
Profit = (Unit Price X Quantity Sold) - (Fixed Cost + Variable Cost)

Question 17

Total Cost (TC)

Answer 17

The total expense incurred by a firm in producing and marketing a product. Total cost is the sum of fixed cost and variable cost.

Question 18

Total Revenue (TR)

Answer 18

The total money received from the sales of a product.

Question 19

Unit Variable Cost (UVC)

Answer 19

Variable cost expressed on a per unit basis for a product.

Question 20

Value

Answer 20

The ratio of perceived benefits to price;
or
Value = (Perceived benefits ÷ Price)

Question 21

Value-pricing

Answer 21

The practice of simultaneously increasing product and service benefits while maintaining or decreasing price.

Question 22

Variable Cost (VC)

Answer 22

The sum of the expenses of the firm that vary directly with the quantity of a product that is produced and sold.