On January 1, the Cost of a Product Is $50

question 8

Short Answer

On January 1, the cost of a product is $50. If inflation for that year is 12 percent, what does the product cost on December 31 of that year?

---

Definitions:

Substitutes

Products or services that can be used in place of another to satisfy consumer needs or desires.

Skimming Strategy

A pricing approach where a high price is set for a new product to maximize profits from customers willing to pay high prices before lowering the price over time.

Penetration Pricing

A pricing strategy where a product is introduced to the market at a very low price to stimulate demand and gain market share quickly.

Market Prices

The current prices at which goods or services are bought and sold in a marketplace.