The Increased Profits a Service Firm Realizes from Customer Retention

question 52

Multiple Choice

The increased profits a service firm realizes from customer retention result from all of the following EXCEPT:

• A) Lower costs
• B) Increased volume of purchases
• C) The ability to charge a price premium
• D) Customer defection
• E) Increased word-of-mouth communication

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Definitions:

Price Elasticity

A measure of how much the quantity demanded of a good changes in response to a change in its price, indicating how sensitive consumers are to price changes.

Elastic Section

Part of a demand curve where a small change in price leads to a relatively large change in quantity demanded, indicating high price sensitivity.

Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity of the good demanded by consumers.

Perfectly Inelastic

A market condition where the quantity demanded or supplied does not change regardless of a price change.