Customers Are Likely to Be More Price Sensitive When

question 157

Multiple Choice

Customers are likely to be more price sensitive when:

• A) the total expenditure is great.
• B) they have to pay the bill themselves.
• C) the end benefit isn't very significant.
• D) they haven't yet spent any money related to the purchase.
• E) All of these alternatives are correct.

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Definitions:

Implicit Cost

The monetary income a firm sacrifices when it uses a resource it owns rather than supplying the resource in the market; equal to what the resource could have earned in the best-paying alternative employment; includes a normal profit.

Forgone Rent

The potential income lost by choosing to use a property or resource in a way that is not financially optimal, such as using land for personal use instead of renting it out.

Rental Payments

Regular payments made by a tenant to an owner for the use of the owner's property or land.

Accounting Profit

The total revenue of a firm less its explicit costs; the profit (or net income) that appears on accounting statements and that is reported to the government for tax purposes.