Experience-Curve Pricing Refers to

question 31

Multiple Choice

Experience-curve pricing refers to

• A) the method of pricing where the price of a product often rises following the expansion of costs associated with the firm's producing and selling an increased volume of the product.
• B) the point at which profits double, then double again, as more consumers buy the product.
• C) a predictive pricing plan based upon the knowledge that the prices will fluctuate in a predictable pattern within a given industry based on the diffusion of innovation.
• D) a method of pricing based on the learning effect, which holds that the unit cost of many products and services declines by 10 to 30 percent each time a firm's experience at producing and selling them doubles.
• E) a pricing strategy that uses price estimates based upon the consensus of the salesforce and the firm's top management team.

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Definitions:

Just Noticeable Difference

The smallest change in the intensity of a stimulus that can be detected.

Weber's Law

A principle in psychology stating that the just-noticeable difference in a stimulus is proportional to the magnitude of the original stimulus.

Opponent-Process Principle

A psychological and physiological model that explains contrasting emotional and sensory responses to stimuli.

Sensory Information

The data received by the senses (sight, hearing, touch, taste, and smell) which is then processed by the brain.