If a Business Decides to Reduce Its Prices Once in a While

question 175

Multiple Choice

If a business decides to reduce its prices once in a while on an unsystematic basis, it is using

• A) price reduction planning.
• B) random discounting.
• C) bait pricing.
• D) periodic discounting.
• E) penetration pricing.

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Definitions:

Average Total Cost

The total cost of production divided by the quantity produced, indicating the average cost per unit of output.

Average Variable Cost

Average variable cost (AVC) refers to the total variable costs per unit of output, covering expenses that change with the level of production, such as materials and labor.

Equilibrium Price

The price at which the quantity of a good demanded by consumers equals the quantity supplied by producers, resulting in a stable market condition.

Long-run Supply Curve

A graphical representation of the quantities of goods and services that producers are willing to offer for sale at different prices in the long run, when all inputs can be varied.