Price

Question 1

Define price

Answer 1

The money charged for a product or service

Question 2

Factors impacting price

Answer 2

Competitors products and prices, costs of production, market conditions, state of economy, location, price elasticity of demand, reputation

Question 3

Penetration pricing

Answer 3

Low price charged to help attract customers

Question 4

Price skimming

Answer 4

High prices charged to gain a high profit margin

Question 5

Early adopters

Answer 5

People willing to pay a higher price to purchase products when first launches

Question 6

Price leadership and price taking

Answer 6

Large market leading firms, able to set price in the market as they have the market power

Question 7

Predator

Answer 7

Sets low prices in order to drive other firms out of the market

Question 8

Premium pricing

Answer 8

Charging high prices for high quality goods

Question 9

Seasonal pricing

Answer 9

Different prices charged depending on the level of demand

Question 10

Loss leaders

Answer 10

Short term tactic, set lower price than usual to attract customers in hope they will buy other items full price

Question 11

Psychological pricing

Answer 11

Prices are set to appear lower to the customer e.g. £9.99

Question 12

Price discrimination

Answer 12

Higher price are charged to some customers for the same product

Question 13

Cost plus pricing

Answer 13

The average cost of producing a product plus a sum to ensure profit is made

Question 14

Mark up

Answer 14

The % added to a product to ensure profit is made

Question 15

Price elasticity of demand formula

Answer 15

% change in quantity demanded divided by % change in price

Question 16

Elastic goods

Answer 16

Answer greater than 1 where demand will change with change in price

Question 17

Inelastic goods

Answer 17

Less than one, unresponsive

Question 18

Unitary elasticity

Answer 18

An elasticity of 1

Question 19

Elasticity

Answer 19

Measures the responsiveness of demand to a change in a relevant variable- price or income

Question 20

Price elasticity of demand definition

Answer 20

Measures the extent to which the quantity of a product demanded is affected by a change in price

Question 21

Factors influencing PED

Answer 21

Brand strength, necessity, habit, availability of substitutes, time

Question 22

Income elasticity of demand definition

Answer 22

Measures the extent to which the quantity of a product demanded is affected by a change in income

Question 23

YED formula

Answer 23

% change in quantity demanded divided by % change in income