Diane Owns a Bakery Where She Sells Cupcakes

question 96

Multiple Choice

Diane owns a bakery where she sells cupcakes.Two blocks down there is another bakery,CC's Bakery,that sells cupcakes for $1 less than Diane.Diane decides to lower her price and match CC's Bakery prices.What type of pricing strategy is Diane implementing?

• A) internal pricing
• B) profit-oriented pricing
• C) competitor-oriented pricing
• D) customer-oriented pricing
• E) sales-oriented pricing

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Definitions:

Consumer's Preferences

The subjective tastes and desires that guide consumer behavior in choosing among various goods and services.

Prices

The price projected, required, or paid in return for a particular item.

Marginal Rate

The rate at which one quantity changes with respect to a change in another quantity, often used in the context of tax or interest.

Substitution

In economics, the process by which a good or service is replaced with another due to changes in price, preferences, or availability.