What Is a Characteristic of the Price-Quality Relationship, in the Absence

question 90

Multiple Choice

What is a characteristic of the price-quality relationship, in the absence of other cues?

• A) Many buyers interpret low prices as signals of high-quality products.
• B) Price offers no clue of a product's quality to prospective purchasers.
• C) Price is an important indicator of product quality to consumers.
• D) The relationship between price and quality holds true only in declining economies.

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Definitions:

Fixed Expenses

Costs that do not change with the level of production or sales over a short period of time, such as rent or salaries.

Break-Even Point

The level of production or volume of sales at which total costs and total revenue are equal, resulting in no net loss or gain.

Variable Expenses

Variable expenses fluctuate with business activity levels, such as materials and labor costs, which increase as production increases.

Fixed Expenses

Costs that do not vary with changes in production volume or sales, such as rent, salaries, and insurance.