Chapter Questions - 11.

2 Price
Questions from the textbook
1. What three things must the price of a good or service do?
One thing that the price of a service must do is it must make up for the cost of
buying or selling products. Additionally it must be able to generate the
amount of profit a company wants. Finally the price must mach what a
customer is willing to pay for product.
2. List the seven factors that influence the price of a product.
Company Goals, Expenses, Customer Perception, Competition, Supply and
Demand, and Economic Conditions.

3. List and explain the five types of discount pricing strategy used for the B2B
market.
There are five different discounts that are used for B2B sales. One is a cash
discount which is a percentage deducted from the toal price. There are promtial
discounts where a business must promote the product they buy in exchange for
buying a product. Quantity Discounts are reduced prices if the business buys
more of a product. Also there are Seasonal Discount which a given if retailer buy
in advance of the season. Finally Trade Discount are a way manufacturers set
prices for wholesalers and retalers.

4. What is loss-leader pricing and what is the purpose of it?

5. How can a price floor cause a surplus?

Other chapter questions

6. What is the value proposition of an iPhone?

7. You go into Kohl’s and buy a sweatshirt that is normally priced at $49.99, but
you are getting it for 40% off. What is the list price and what is the selling
price?
The list price is $49.99 and the selling price is $29.99
 8. What is the MSRP of a 2018 Hyundai Tucson Value model?

9. Give an example of a business whose pricing objectives maximizes sales and

a business that maximizes profit (different example from the slide show).
Target and Gucci
10. Explain why car prices are high right now?

11. Determine the GPM and markup percent on the following:

GPM: 44.4% Markup: 179.9%

12. What psychological pricing strategy do you most fall for and why do you think
that is?

13. Give an example of a company who got into legal trouble for unfair pricing
practices. Explain the situation.

14. Do you agree or disagree with rent control (which is a price ceiling) and why?