Segmented Pricing Is Only Effective When ________

question 59

Multiple Choice

Segmented pricing is only effective when ________.

• A) the segments show similar degrees of demand
• B) the cost of segmenting does not exceed the revenue obtained from the price difference
• C) the segmented prices do not reflect real differences in customers' perceived value
• D) the customers of different socio-economic classes are treated according to their rank
• E) companies make their services and products accessible exclusively to wealthy patrons

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Definitions:

High-Low Method

A technique used in managerial accounting to estimate fixed and variable costs based on the highest and lowest levels of activity.

Electricity

A form of energy resulting from the existence of charged particles, used as a power source.

Variable Component

Denotes a part of a cost or expense that varies directly with the level of activity or output.

Mixed Cost

A cost that contains both variable and fixed cost elements, changing with the level of production or sales but not in direct proportion.