When a Company Initiates a Price Cut in an Attempt

question 121

Essay

When a company initiates a price cut in an attempt to dominate the market through lower costs (such as the $1.00 special lunch menus at key fast food restaurants) the company must ensure that it does not fall into certain low cost traps. List these four "traps."

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Definitions:

Pearson's Correlations

A measure of the linear correlation between two variables, showing how closely the two are related.

P-value

The odds of encountering test findings that are equally or more extreme than the observed ones, with the null hypothesis assumed to be valid.

Null Hypothesis

A hypothesis that assumes no significant difference or effect in a population parameter or between populations, typically tested against an alternative hypothesis.

Slope

In mathematics, the slope is the measure of the steepness or incline of a line, calculated as the ratio of the vertical change to the horizontal change between two points on the line.