Final

Question 0

What is the market-based price

Answer 0

The selling price depends on the degree of competition and the degree to which the company’s product is different from the competitors products. The prices are based on customer demand

Question 1

What is a cost based price

Answer 1

The selling price is computed as the product’s cost plus a markup
In a service organization, cost-based pricing is determined by calculating the labor rate and the materials loading charge

Question 2

Price elasticity: elastic

Answer 2

An increase in selling price should decrease customer demand for the products so that fewer units are sold.
When small increases in price result in large decreases in demand, the demand for that product is considered elastic

Question 3

In elasticity

Answer 3

When the decreasing unit sales does not offset the increased selling price, the price increase causes total revenue to increase

Question 4

What is the profit maximizing price

Answer 4

When marginal costs equal marginal revenue’s

Question 5

What is the price elasticity of demand formula

Answer 5

Ln(one plus the percentage change in quantity sold) over ln( one plus a percentage change in price)

Question 6

What is the profit maximizing formula

Answer 6

(Elasticity over (one plus elasticity)) times the variable cost

Question 7

What is the death spiral

Answer 7

With cost based prices, Sales volumes inappropriately influence the price causing a downward demand spiral

Question 8

Peakload pricing

Answer 8

Industries charge different prices at different times to reduce capacity constraints

Question 9

Price skimming

Answer 9

When a higher price is charged for a product or service when it is first introduced

Question 10

Penetration pricing

Answer 10

The practice of setting low prices when new products are introduced to increase marketshare

Question 11

Price gouging

Answer 11

Practice of charging a price viewed by consumers as too high

Question 12

Price discrimination

Answer 12

Charging different prices to different customers

Question 13

Predatory pricing

Answer 13

Setting prices too low to drive out competitors out of the market and then raise the prices

Question 14

Collusive pricing

Answer 14

Competitors get together to determine prices this is illegal

Question 15

Dumping

Answer 15

When foreign-based companies sell products at lower prices than in their home country

Question 16

What is an NPO

Answer 16

Look it up

Question 17

What is a transfer price

Answer 17

The price used to record revenue and cost when goods or services are transferred between departments

Question 18

What is the perfect transfer price

Answer 18

The opportunity cost of transferring goods and services internally
External demand is zero, and the selling division has excess capacity, the transfer price will be the variable cost
The capacity is limited and goods or services can be sold externally, then opportunity cost would be the market price