The Strategy of Trading Down Involves

question 62

Multiple Choice

The strategy of trading down involves

• A)adding product features but using lower quality product materials.
• B)reducing product features and using lower quality product materials.
• C)reducing the number of features, quality, or price of a product.
• D)seeking a less price sensitive target market.
• E)changing to a mass market discount distributor.

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Definitions:

MR

Marginal Revenue is the additional income from selling one more unit of a good; sometimes equal to price.

Short-Run Equilibrium

A situation in which the quantity supplied and quantity demanded in a market are equal at a particular price level, but only for a temporary period.

Monopolistically Competitive

A market structure where many companies sell products that are similar but not identical, allowing for competition based on product differentiation.

Losses

Negative financial results that occur when a company's expenses exceed its revenues.