Pricing Decisions (1)

Question 1

Historically, what would the cost of a product have had?

Answer 1

A large influence on the selling price set for that product

Question 2

Factors that influence price? (De)

Answer 2

Demand

Question 3

Factors that influence price? (Q)

Answer 3

Quality

Question 4

Factors that influence price? (C)

Answer 4

Competitors

Question 5

Factors that influence price? (Su)

Answer 5

Substitutes

Question 6

Factors that influence price? (I)

Answer 6

Inflation

Question 7

Factors that influence price? (A)

Answer 7

Age of product

Question 8

Factors that influence price? (Di)

Answer 8

Disposable incomes

Question 9

Why does price impact volume sold?

Answer 9

Since a higher price will normally lower the volume sold

Question 10

Why do some organisations consider increasing revenue?

Answer 10

If the fall in volume sold is lower than the increase in the price

Question 11

What is price-inelastic?

Answer 11

Demand is said to be unresponsive to price changes

Question 12

What is price elasticity of demand (PED)?

Answer 12

Measures the extent of the change in market demand for a product or service in response to a change in its price

Question 13

What can the value of elasticity be?

Answer 13

Anything from zero to infinity

Question 14

if value of elasticity is less than one?

Answer 14

The demand is inelastic

Question 15

if value of elasticity is greater than one?

Answer 15

The demand is elastic

Question 16

is demand being inelastic normal?

Answer 16

Ues because PED is expected to be negative since demand will fall if price rises and vice versa

Question 17

When is demand referred to as elastic?

Answer 17

If percentage change in demand is higher than the percentage change in price

Question 18

Effect where demand is inelastic?

Answer 18

Prices can be raised without significantly affecting demand

Question 19

Effect where demand is elastic?

Answer 19

A decrease in price will result in an increase in volume

Question 20

How might income act to reduce elasticity

Answer 20

if a good takes up a low percentage of customer income, customers are less sensitive to price rises

Question 21

How might degree of necessity act to reduce elasticity

Answer 21

An essential item will still have to be bought even if price rises

Question 22

How might availability of alternative products act to reduce elasticity

Answer 22

If there are few alternative substitute goods or services, there will be a smaller fall in demand if price rises