Hector Is Opening an Appliance Store

question 93

Multiple Choice

Hector is opening an appliance store. He has estimated a monthly profit goal based on his anticipated expenses and earning goals and uses it to set product prices. Hector is implementing a ________ pricing strategy.

• A) penetration
• B) price skimming
• C) target return on investment (ROI)
• D) competitor-based
• E) value

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Definitions:

Technological Change

Development of new technologies allowing factors of production to be used more effectively.

Isoquant

A curve representing all the combinations of inputs that yield the same level of output.

Isocost Line

A graph that shows all possible combinations of labor and capital that can be purchased for a given total cost.

Returns to Scale

The rate at which production output increases in response to a proportional increase in all inputs (factors of production).