When Customers Are Given the Opportunity to Purchase a Package

question 11

Multiple Choice

When customers are given the opportunity to purchase a package deal at a reduced price compared to what the individual components of the package would cost separately,the firm is using a __________________ strategy.

• A)Product line pricing
• B)Captive pricing
• C)Price bundling
• D)Reference pricing
• E)Prestige pricing

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Definitions:

Profitability

A measure of the efficiency and effectiveness of a company in generating profits from its operations.

Mixed Costs

Expenses that have both fixed and variable components, meaning part of the cost varies with the level of output while part remains constant.

Contribution Margin

The difference between sales revenue and the variable costs associated with the production or sale of products or services. It's used to determine the ability of a business to cover its fixed costs.

Margin of Safety

This financial ratio measures the difference between actual or expected sales and the break-even point, indicating the cushion a company has before it incurs a loss.