Different Brands Within a Company's Product Line Generally Have Different

question 216

Multiple Choice

Different brands within a company's product line generally have different profit margins; for example, items with higher price lines have higher profit margins. Assume that Nike Variety tennis shoes have variable costs of $6 and sell for $24. Also assume that Nike Wimbledon tennis shoes have variable costs of $38 and sell for $48, but when fixed overhead is added, the shoe is unprofitable by $2 per pair. Which statement is most accurate regarding Nike's pricing approach with these two product lines?

• A)Demand for each shoe line is unrelated to price.
• B)Nike is using a cost-plus-percentage-of-cost pricing strategy.
• C)Nike is using a product-line pricing strategy.
• D)Demand for each shoe line is unrelated to product quality.
• E)Consumers do not use price as an indication of quality.

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