Experience Curve Pricing Refers to

question 84

Multiple Choice

Experience curve pricing refers to

• A)the method of pricing where the price of a product often rises following the expansion of costs associated with the firm's producing and selling an increased volume of the product.
• B)the point at which profits double, then double again, as more consumers buy the product.
• C)a predictive pricing plan based upon the knowledge that the prices will fluctuate in a predictable pattern within a given industry based on the diffusion of innovation.
• D)a method of pricing based on the learning effect, which holds that the unit cost of many products and services declines by 10 percent to 30 percent each time a firm's experience at producing and selling them doubles.
• E)a pricing strategy that uses price estimates based upon the consensus of the salesforce and the firm's top management team.

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Definitions:

Stated Interest Payment

The amount of interest that a bond or loan promises to pay to its holder, usually expressed as an annual percentage of the principal.

Coupon

The interest rate paid by a bond, typically expressed as an annual percentage of the bond's face value.

Income Bond

A type of debt security that only pays interest if the issuer has sufficient earnings.

Semi-annual

Occurring two times a year, generally spaced six months apart.