One of the Price Limitations That Need to Be Considered

question 63

Multiple Choice

One of the price limitations that need to be considered by manufacturers is

• A) the price that is charged by competitors for similar and substitute products.
• B) offering quantity discounts for purchasing a large number of units.
• C) the payments made to retailers to get them to stock items on their shelves.
• D) to redesign the product so that its costs are lower.

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Definitions:

Opportunity Cost

Opportunity cost is the loss of potential gain from other alternatives when one alternative is chosen.

Consumer Surplus

The separation between the total amount consumers are equipped and willing to pay for a good or service and what is effectively paid.

Total Surplus

The sum of consumer and producer surplus, reflecting the total benefit to society from the production and consumption of goods and services.

Consumer Surplus

The split between the maximum total consumers are prepared to pay for a product or service and the actual payment.