Chapter 3

Question 1

a concept that says a dollar you receive in the future will be worth less than a dollar you receive in the present (today)

Answer 1

time value of money

Question 2

the value of all goods and services produced in a country in a given time period

Answer 2

gross domestic product (GDP)

Question 3

an increase in the general level of prices for goods and services

Answer 3

inflation

Question 4

rising prices with the rate of increase slowing down

Answer 4

disinflation

Question 5

a decrease in the general level of prices for goods and services

Answer 5

deflation

Question 6

higher prices as a result of consumers wanting to buy more goods and services than producers supply

Answer 6

demand-pull inflation

Question 6

higher prices as a result of consumers wanting to buy more goods and services than producers supply

Answer 6

demand-pull inflation

Question 7

rising prices as a result of rising production costs

Answer 7

cost-push inflation

Question 8

high prices followed by lower prices and then high prices again

Answer 8

reflation

Question 9

rapidly rising prices that are out of control

Answer 9

hyperinflation

Question 10

a measure of the efficiency with which goods and services are made (comparison of total output to total input)

Answer 10

productivity

Question 11

a profit that allows a business to survive and grow

Answer 11

normal profit

Question 12

setting a price based on how much consumers are willing to pay

Answer 12

value-based pricing

Question 13

setting a price to be competitive with prices of similar products currently being sold

Answer 13

market-based pricing

Question 14

setting an introductory price high to recover the research and development (R&D) costs

Answer 14

cost-recovery pricing

Question 15

setting a price based on production cost plus a markup

Answer 15

cost-plus pricing

Question 16

the percentage amount added to production cost to obtain the price of an item

Answer 16

markup

Question 17

the process of selecting goods and services based on need, want, and logical choices

Answer 17

rational buying

Question 18

the process of purchasing products based on desire rather than logic

Answer 18

emotional buying

Question 19

purchasing something on the spur of the moment without thinking it through or any planning

Answer 19

impulse buying

Question 20

saving as much as possible and spending money only when necessary

Answer 20

economizing

Question 21

getting the highest value for the money spent

Answer 21

optimizing

Question 22

carrying well-known brand names to attract customers who are loyal to those brands

Answer 22

branding strategy

Question 23

offering the lowest everyday price possible

Answer 23

discount pricing

Question 24

informing consumers about products and encouraging them to buy

Answer 24

advertising

Question 25

a specific group of people who are likely to buy a product

Answer 25

target audience

Question 26

ads placed on modes of public transportation or in public transportation areas

Answer 26

transit advertising

Question 27

a program designed to encourage repeat business by providing special discounts and other incentives

Answer 27

customer loyalty program

Question 28

checking prices, brands, and quality among several sellers to make sure you are getting the best deal

Answer 28

comparison shopping

Question 29

distribution of product information directly to consumers

Answer 29

direct advertising

Question 30

recording video or audio for later viewing or listening

Answer 30

time-shifting

Question 31

storing media, such as music or movies, on one device to be accessed from another place through another device

Answer 31

space-shifting

Question 32

information on products advising consumers of risks and safety issues

Answer 32

warning label

Question 33

false or misleading claims made about the quality, price, or purpose of a particular product

Answer 33

deception

Question 34

an illegal sales technique in which a business advertises a product with the intent of persuading consumers to buy a more expensive product

Answer 34

bait and switch

Question 35

a technique whereby a company advertises a product or service at a low price to lure in customers and then attempts to persuade them that they need additional products or services

Answer 35

low-balling

Question 36

an illegal, multilevel marketing gimmick that promises members commissions from their own sales as well as from the sales of other members they recruit

Answer 36

pyramid scheme

Question 37

a fraudulent investment operation in which money collected from new investors is used to pay off earlier investors

Answer 37

Ponzi scheme

Question 38

a scam in which a con artist convinces people to give up their money or personal information in return for a share of a larger sum of money

Answer 38

pigeon drop

Question 39

a lengthy paid TV advertisement that includes testimonials and product demonstrations

Answer 39

infomercial