Chapter 28 (Price)

Question 1

Competitive pricing

Answer 1

Setting prices at the same/similar level to that of its competitors

Question 2

Contribution pricing

Answer 2

Setting prices higher than the direct (variable) costs so that they can pay off indirect (fixed) costs

Question 3

Dynamic pricing

Answer 3

When prices are constantly fluctuating due to demand

Question 4

Loss leader pricing

Answer 4

Setting prices below its cost of production to entice customers to buy the other products that the business sells

Question 5

Mark-up

Answer 5

The amount charged by a business (how much higher the price is compared to the cost of production)

Question 6

Mark-up pricing

Answer 6

When the price is the cost per unit of production plus a percentage of that amount or or another specific amount

Question 7

Penetration pricing

Answer 7

Setting low prices compared to rivals to gain entry into a new market (launch)

Question 8

Predatory pricing

Answer 8

Temporarily setting low prices so competitors cannot compete

Question 9

Premium pricing

Answer 9

Setting prices significantly higher than competitors because they offer something unique

Question 10

Price

Answer 10

The amount paid by a customer for a product

Question 11

Price elasticity of demand (PED)

Answer 11

The degree to which demand for a product changes with price changes

Question 12

Price wars

Answer 12

Businesses competing by a series of price cuts

Question 13

Pricing methods

Answer 13

Various methods of setting the price of a product