pricing

Question 1

Price elasticity of demand meaning

Answer 1

how sensitive is the quantity demanded of a good or service is to its price change

Question 2

Mid point formula of price elasticity of demand

Answer 2

avg quality ( new+old/2)
_____________________________________
New price - old price
———————————
avg price (new+old/2)

Question 3

elastic, inelastic and unitary elastic

Answer 3

Elastic greater than 1
unitary elastic equal to 1
inlastic less than 1

Question 4

elastic unitary elastic in elastic relation with total revenue

Answer 4

elastic
Price📈⬆️ - Total revenue ⬇️📉
price📉⬇️ - total revenue ⬆️📈

unitary elastic
price⬆️ - total revenue ⛔
price⬇️ - total revenue ⛔

Inelastic
price⬆️ - total revenue ⬆️
price⬇️ - total revenue ⬇️

Question 5

elastic unitary elastic in elastic diagram

Answer 5

elastic upper diagram
unitary elastic mid line demand curve
inelastic very low slanting line

Question 6

factors affecting price elasticity of demand

Answer 6

elasticity increases there are more number of substitutes

elasticity increases when the length of time increases

elasticity is higher for luxury goods

elasticity is lower for necessity

Question 7

Meaning of demand curve

Answer 7

Shows the quantity of a product that would be demanded at various prices

Price on y axis
quantity demanded on x axis

Question 8

Shifts in demand curve

Answer 8

Positive shift right side
negative shift left side

Question 9

Factors resulting in positive shifts in demand curve

Answer 9

Direct relationship

1 price of substitute good

2 consumer income in wealth normal goods

3 size of market new consumers

4 expectation of price increases

Question 10

Factors resulting in negative shift in Demand curve

Answer 10

Inverse relationship

1 Price of complement goods

2 Consumer income and wealth inferior goods

3 Group boycott

Question 11

Factors resulting in positive shift in supply curve

Answer 11

Direct relationship

1 Number of producers

2 government subsidiaries

3 price expectations- If prices are expected to be higher for the goods in the future, production of goods will increase

4 technological advances

Question 12

Factors resulting in negative or left word shift in supply curve

Answer 12

Inverse relations

1 Changes in production cost taxes

2 Price of other goods- If other products can be produced with greater returns, produces will produce those goods

Question 13

meaning of cost plus pricing

Answer 13

Cost-Based Pricing:

Definition: Cost-based pricing is a pricing strategy where the selling price of a product or service is determined by adding a markup to the cost of producing or acquiring that product or service.

SP= unit cost +(markup %on unit cost x unite cost )

Question 14

meaning of target pricing

Answer 14

Target Pricing:

target cost = competitive price - unit profit

Question 15

meaning of market based pricing

Answer 15

This approach involves setting the price of a product or service based on what similar products or services are priced at in the marketplace.

Used in situation where
1 product differentiation is very less.
2 People will not pay more than the market. 3 Strong influence of the market

Question 16

concurrent engineering

Answer 16

approach where different stages of the design and manufacturing process are carried out simultaneously rather than sequentially, promoting collaboration and efficiency.

Question 17

value engineering

Answer 17

Value engineering is a systematic approach to improving the function and performance of products, processes, or systems while minimizing costs.

Question 18

Lifecycle costing

Answer 18

approach that considers the total cost of owning and operating a product or system throughout its entire lifespan, including initial purchase, maintenance, and disposal.

Question 19

Target costing process techniques

Answer 19

1 Market assessment tools -to use to assess the market and consumers wants and needs Service focus groups, interviews

2 Reverse engineering or tear down analysis

3 Industry competitive analysis

4 Financial planning and analysis

5 Internal cost analysis

6 Cost tables

Question 20

Peak load pricing

Answer 20

Wearing the price of a product or service based on the demand and physical capacity limits.
Example, airlines, hotels

-When demand approaches capacity limits price go up
- when slack or excess capacity is available, prices go down

Question 21

market structure

Answer 21

competitive – 1 perfect competition
2 monopolistic competition

less competitive– 3 oligopoly
4 monopoly