When Demand Is Highly Price Sensitive, the Company Needs to Consider

question 17

Multiple Choice

When demand is highly price sensitive, the company needs to consider how it can _________________ from a global perspective.

• A) raise prices
• B) lower prices
• C) lower service
• D) raise quality
• E) reduce costs

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Definitions:

Break-even Sales

The amount of revenue needed to cover both the variable and fixed costs of a business, resulting in zero profit or loss.

Variable Cost

Costs that vary directly with the level of production or service delivery, such as raw materials and labor costs.

Fixed Costs

Costs that do not vary with the level of production or sales volume, remaining constant even as production levels change.

Break-even Point

The point at which total costs equal total revenue, resulting in no net loss or gain for the business.