If the Price of a Good Goes Up by 5

question 121

Multiple Choice

If the price of a good goes up by 5 percent and, in response, the quantity demanded falls by 15 percent, the price elasticity of demand will be:

• A) .05.
• B) 3.
• C) 0.3333.
• D) 0.15.

Understand everyday low pricing (EDLP) strategy and its impact on marketing and pricing tactics.

Explain the concept and calculation of trade-in allowances.

Identify the purpose and effect of geographical adjustments to pricing.

Recognize the strategies behind pricing adjustments and allowances to stimulate specific behaviors in the distribution chain.

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Definitions:

Experience-Curve Pricing

A pricing strategy that takes into account the reduction in costs and increase in efficiency that occurs as a company gains experience producing a product or service.

Target Return-On-Investment Pricing

Setting a price to achieve an annual target return on investment (ROI).

Orion Lunar Spacecraft

A NASA spacecraft designed to carry astronauts to the Moon and beyond as part of the Artemis program.

Cost-plus-fixed-fee Pricing

A pricing strategy where the selling price is determined by adding a fixed fee or profit margin to the total cost of manufacturing or producing the product.