Gillette Uses ________ Pricing When It Offers Razor Handles at a Low

question 63

Multiple Choice

Gillette uses ________ pricing when it offers razor handles at a low cost, but places a high markup on the replacement razor blades that fit in the handles.

• A) optional feature
• B) two-part
• C) by-product
• D) product line
• E) captive-product

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Definitions:

Business Revenues

The income generated from the sale of goods and services before any costs or expenses are deducted.

Economic Losses

The difference when total costs exceed total revenues, indicating a negative outcome from business activities.

Principal-Agent Problem

A conflict in priorities between a person or group (the agent) making decisions on behalf of another person or group (the principal).

Negative Externality

A cost that affects a party who did not choose to incur that cost, often associated with production or consumption of goods and services.