The "Right" Price, as Determined by the Small Business Owner

question 22

Multiple Choice

The "right" price, as determined by the small business owner, is a range between what the market will bear and what the product ______.

• A) value is perceived to be
• B) costs
• C) is worth
• D) image is perceived to be

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Definitions:

Fixed Costs

Expenses that do not change in total regardless of the level of production or sales activity, such as rent, salaries, and insurance.

Marginal Costs

The additional cost incurred by producing one extra unit of a product or service.

Economic Profits

Profits exceeding the opportunity costs of a next best alternative, measuring the extent to which a firm has generated excess returns over its costs, including the cost of capital.

Cost of Capital

The rate of return a company must earn on its investments to maintain its market value and attract funds.