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25 Cards in this Set

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  • Back
Price
some unit of value given up by one party in return for something from another party
Elasticity of demand
the relationship between changes in price and quantities sold
Break-even analysis (BEA)
a standard analysis technique that literally means “to have zero profit.” It is the point at which total cost and total revenue are equal. Break-even sales= Fixed costs/ (selling price- variable costs)
Demand schedules
provide a systematic look at the relationship between price and quantity sold
Elasticity coefficient
the absolute value of the percentage change in quantity divided by the percentage change in price
Inelastic demand
reflected by an elasticity coefficient of less than 1
Elastic demand
reflected by an elasticity coefficient of more than 1
Unitary elasticity
means that the coefficient is exactly equal to 1
Marginal revenues
changes in a firm’s total revenue per unit change in its sales level
Marginal costs
the changes in a firm’s total costs per unit in its output level
ROI
the percentage of the dollar profit generated by each dollar invested in the business
Theory of dual entitlement
holds that consumers believe there are terms in a transaction to which both consumers and sellers are “entitled” over time
Market (price) skimming
a strategy of pricing the new product at a relatively high level and then gradually reducing it over time
Penetration strategy
requires that a firm enter the market at a relatively low price in an attempt to obtain market share and expand demand for its product
Price shading
occurs when, during negotiation, a salesperson reduces the base price of a product
Free on-board (FOB) pricing
leaves the cost and responsibility of transportation to the customer
Uniform delivered pricing
means that the seller charges al customers the same transportation cost regardless of their location
Price promotions
short-term price reductions designed to create an incentive for consumers to buy now rather than later and/or stock up on the product
Everyday low pricing (EDLP)
refers to the pricing strategy in which a firm charges the same low price every day
Price-fixing
is a conspiracy to fix competitive prices; it restricts competition and leads to higher prices for customers
Sherman Antitrust Act
prohibits any contract, combination, or conspiracy that restricts trade
Cartels
organizations of firms in an industry where the central organization makes certain management decisions and carries out functions that would normally be performed with the individual firms
Price discrimination
occurs when a seller offers a lower price to some buyers than it does to other buyers
Predatory pricing
a practice where one firm attempts to drive out rivals by pricing at such a low level that a rival cannot make any money
Markup laws
state laws that require a certain markup above cost in particular industries to protect consumers and small businesses from predatory pricing