A Restaurant Wants to Use Value-Based Pricing

question 147

Multiple Choice

A restaurant wants to use value-based pricing. It knows the costs of the ingredients in the food. It must also factor in ________ in determining customer satisfaction and value.

• A) wages of employees
• B) costs of utilities of the restaurant
• C) atmosphere and décor of the restaurant
• D) travel distance for customers
• E) percentage of bar patrons versus dining patrons

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Definitions:

CAPM

Capital Asset Pricing Model, a formula that describes the relationship between the expected return of an investment and its risk.

Risk-Adjusted Basis

A method of calculating returns or performance that accounts for the level of risk associated with an investment.

Market Proxy

A stock market index or a similar benchmark used to represent the overall movement of the market.

Mean/Variance Efficient

Describes a portfolio that offers the highest expected return for a given level of risk or the lowest risk for a given level of expected return.