Ch
What sets the floor for product prices?
Product cost
In an effort to differentiate its offerings from its competitors, Pegasus Computers decided to add an extra USB port in all its laptops besides providing a free pair of Delphi power bass headphones with every Pegasus laptop. Although the additional features increased the price of the laptops by $500, Pegasus was confident that the strategy would help boost demand for its laptops substantially. This is an example of ________
Value added pricing
Azure Air, an airline company, offers attractive prices to customers with tighter budgets. A no-frills airline, it charges for all other additional services, such as baggage handling and in-flight refreshments. Which of the following best describes Azure Air's pricing method?
Good value pricing
Markup pricing is popular because when all firms in the industry use this pricing method, prices tend to be similar, so price competition is minimized.
True
In which situation is the market dominated by one seller?
Pure monopoly
Mansfield Pharmaceuticals markets Zipro, an antibiotic. The firm has fixed costs of $1,000,000 and variable costs of $2 per bottle of 50 tablets priced at $10 per bottle. What is the break-even volume?
125,000
Lawyers, accountants, and other professionals typically price by adding a standard markup for profit. This exemplifies ________.
Cost-plus pricing
Why is markup pricing most likely popular?
Sellers do not need to make frequent adjustments as demand changes.
Briefly describe how economic conditions impact a firm's pricing strategies.
Economic conditions can have a strong impact on a firm's pricing strategies. Economic factors such as a boom or recession, inflation, and interest rates affect pricing decisions because they affect consumer spending, consumer perceptions of the product's price and value, and the company's costs of producing and selling a product.
In the aftermath of the recent Great Recession, many consumers have rethought the
Product cost
In an effort to differentiate its offerings from its competitors, Pegasus Computers decided to add an extra USB port in all its laptops besides providing a free pair of Delphi power bass headphones with every Pegasus laptop. Although the additional features increased the price of the laptops by $500, Pegasus was confident that the strategy would help boost demand for its laptops substantially. This is an example of ________
Value added pricing
Azure Air, an airline company, offers attractive prices to customers with tighter budgets. A no-frills airline, it charges for all other additional services, such as baggage handling and in-flight refreshments. Which of the following best describes Azure Air's pricing method?
Good value pricing
Markup pricing is popular because when all firms in the industry use this pricing method, prices tend to be similar, so price competition is minimized.
True
In which situation is the market dominated by one seller?
Pure monopoly
Mansfield Pharmaceuticals markets Zipro, an antibiotic. The firm has fixed costs of $1,000,000 and variable costs of $2 per bottle of 50 tablets priced at $10 per bottle. What is the break-even volume?
125,000
Lawyers, accountants, and other professionals typically price by adding a standard markup for profit. This exemplifies ________.
Cost-plus pricing
Why is markup pricing most likely popular?
Sellers do not need to make frequent adjustments as demand changes.
Briefly describe how economic conditions impact a firm's pricing strategies.
Economic conditions can have a strong impact on a firm's pricing strategies. Economic factors such as a boom or recession, inflation, and interest rates affect pricing decisions because they affect consumer spending, consumer perceptions of the product's price and value, and the company's costs of producing and selling a product.
In the aftermath of the recent Great Recession, many consumers have rethought the