Pricelinecom Is a Firm That Serves as a Clearinghouse for Extra

question 92

Multiple Choice

Priceline.com is a firm that serves as a clearinghouse for extra capacity from airlines, hotels, and cruise lines. It is an example of a firm that uses a(n) ________ strategy.

• A) cost-plus pricing
• B) price war
• C) reverse auction
• D) average-cost pricing
• E) target return pricing

Differentiate between accounting break-even and cash break-even analysis.

Evaluate the effect of changes in sales volume on operating cash flow using the degree of operating leverage.

Analyze the implications of an initial investment and salvage value on project viability.

Understand the concept of perceptual schemas and how they influence our recognition of shapes and patterns.

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Definitions:

Market Value

The ongoing price for buying or selling a service or asset on the open market.

Equilibrium

Equilibrium refers to a state in which market supply and demand balance each other, and as a result, prices become stable.

Call Option

A financial contract that gives the holder the right, but not the obligation, to buy a stock, bond, commodity, or other asset at a specific price within a specified time frame.

Strike Price

The specified price at which the holder of an option can buy (in the case of a call option) or sell (in the case of a put option) the underlying asset.