In _____, Marketers Determine Prices Based on What Consumers Are

question 45

Multiple Choice

In _____, marketers determine prices based on what consumers are willing to pay and then subtract their desired margins to yield target costs.

• A) cost-based pricing
• B) demand-based pricing
• C) gap-determined pricing
• D) fixed-margin pricing

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Definitions:

Salvage Value

The estimated residual value of an asset at the end of its useful life.

Capital Budgeting

The process of planning significant investments in projects that have long-term implications such as the purchase of new equipment or the introduction of a new product.

Internal Rate

Commonly identified as the internal rate of return (IRR), this is the discount rate that sets the net present value (NPV) of all cash flows associated with a specific project to zero.

Discounted Cash Flow

A valuation method used to estimate the value of an investment based on its expected future cash flows, adjusted for time value of money.