Which of These Statements About the Product Life Cycle as a Pricing

question 11

Multiple Choice

Which of these statements about the product life cycle as a pricing constraint is most accurate?

• A) The newer a product is, the higher the price that can usually be charged.
• B) The later in the product life cycle a product is, the higher the price that can usually be charged.
• C) Once a product is considered nostalgic, the price will continue to rise indefinitely.
• D) Fads will generally have only two price points-high and low-but the values of those price points usually will be within 10 percent of each other.
• E) Prices should not be changed until a product reaches its maturity stage.

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Definitions:

Cash Flows

The net amount of cash being transferred into and out of a business, especially as affecting liquidity.

Average Accounting Return

A measure of profitability calculated as the average net income divided by the average book value of investment over a period.

Annual Net Incomes

The total profit of a company after all expenses and taxes have been deducted from revenues for one year.

Salvage Value

The estimate of an asset's worth at the end of its useful life.