(Last Word) Microsoft Charges a Substantially Lower Price for a Software

question 127

Multiple Choice

(Last Word) Microsoft charges a substantially lower price for a software upgrade than for the initial purchase of the software.This implies that Microsoft views the demand curve for the software upgrade to be

• A)more elastic than the demand for the original software.
• B)upsloping rather than downsloping.
• C)less elastic than the demand for the original software.
• D)of less value than the original software.

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Definitions:

Net Cost

The actual cost of a product or service after all discounts, rebates, or allowances have been applied.

Breakeven

A situation where the sum of all costs equals the sum of all revenues, with no profit or loss occurring.

Mark-up

The amount added to the cost price of goods to cover overhead and profit, often expressed as a percentage of the cost.

Operating Expenses

Costs associated with the day-to-day operations of a business, excluding cost of goods sold.