If Local Shell Gasoline Stations Look at BP Stations' Prices

question 115

Multiple Choice

If local Shell gasoline stations look at BP stations' prices as the primary method of determining its own prices, Shell is using

• A) price fixing, which considers competition to be less important than costs.
• B) price fixing, which considers costs to be less important than competitor's prices.
• C) market share pricing, which considers competition to be the ultimate pricing goal.
• D) competition-based pricing, which considers profit to be the ultimate pricing goal.
• E) competition-based pricing, which considers costs to be less important than competitor's prices.

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Definitions:

Abandonment Option

In project management and finance, the option to cease investment in a project if it doesn't meet certain criteria, minimizing losses.

Real Option

A managerial flexibility embedded in investment projects, representing the right, but not the obligation, to undertake certain business decisions, such as expanding, abandoning, or delaying a project.

Expansion Option

A strategic investment choice that gives a company the option but not the obligation to expand its operations or invest in new projects if market conditions are favorable.

Monte Carlo Simulation

A computational technique that uses random sampling to obtain numerical results, often used to assess risk and uncertainty in financial and project management.