MGT 103 - Quiz 3 Ch. 13-16 and podcasts Questions with Correct Answers
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Course
MGT103
Institution
MGT103
Importance of Price to Marketers - Answer-- Price is the only marketing mix variable that can be changed quickly
--Price is related to total revenue and profit
--Profit = Total Revenue - Total Costs
--Profit = (Price x Quantity Sold) - Total Costs
Price has a psychological impact on customers. ...
MGT 103 - Quiz 3 Ch. 13-16 and
podcasts Questions with Correct
Answers
Importance of Price to Marketers - Answer-- Price is the only marketing mix variable that
can be changed quickly
--Price is related to total revenue and profit
--Profit = Total Revenue - Total Costs
--Profit = (Price x Quantity Sold) - Total Costs
Price has a psychological impact on customers. A high or low price can emphasize the
quality of a product.
Profit= - Answer-total revenue - total cost
(price X quantity sold) - total cost
Price - Answer-- The assignment of value, or the amount the consumer must exchange
to receive the offering
--Includes money, effort, time, favors, votes, or anything else that has value to the other
party
--Opportunity costs must also be considered
(Generally a monetary price)
For most products, there is an inverse relationship between price and demand. How
would you get the increase in demand without changing price? - Answer-Change the
quantity w out changing the price, change another one of the Ps, change promotion,
how its being marketed, who it is targeting and how to change that, can change place,
do we wanna change how we distribute it?
Inelastic Demand - Answer-- A change in price results in a little or no change
in quantity demanded (change price form P1 to P2 the demand decreases by a small
amount, not elastic, doesnt move) (i.e gas, when the price of gas goes up people buy it
anyways even if they arent happy, tuition fees)
- A situation in which an increase or a decrease in price will not significantly affect
demand for the product
Elastic Demand - Answer-- A change in price causes a great (opposite) change
in quantity demanded (increase price same amount but quantity changes LARGE
amount)
- A situation in which consumer demand is sensitive to changes in price
How would you classify the following in terms of price elasticity?
GASOLINE - Answer-inelastic
, How would you classify the following in terms of price elasticity?
MOVIE TICKETS - Answer-elastic
How would you classify the following in terms of price elasticity?
AIR TRAVEL - Answer-depends
How would you classify the following in terms of price elasticity?
COFFEE - Answer-Depends, if you buy coffee cause u love coffee people will buy
aways but if you are buying for its purpose chose something cheaper
Types of Costs - Answer-fixed and variable
fixed costs - Answer-Fixed costs don't change with the number of units produced,
whether it's 100 or 10,000. Thus the average fixed cost per unit will always decrease as
the number of units produced increases (Fixed Costs = expenses that do not vary as a
function of output volume (even if no production activity, these remain))
variable costs - Answer-Variable costs are those production costs that are tied to the
number of units produced and thus vary depending on volume.
(Variable costs = expenses that fluctuate in direct proportion to the output volume of
units produced)
Variable vs. Fixed Costs - Answer-- Variable costs = expenses that fluctuate in direct
proportion to the output volume of units produced
--Cost of raw materials, credit card fees, piece rate labor, sales commissions, delivery
expenses
- Fixed Costs = expenses that do not vary as a function of output volume (even if no
production activity, these remain)
-- Rent, mortgage payment, insurance, computers, salary of full-time workers,
advertising
(Dont increase dependent on how many units decrease or we sell, dont think fixed costs
cant increase because they can, ie the rent a person pays is a certain amount but the
landlord can change the price, doesnt have to do with units sold, etc.)
- Generally higher proportion of variable costs to fixed costs is looked at more favorably
by investors because a profit can be generated at a low sales level (there are few fixed
costs that must be paid each accounting period)
Break Even Analysis - Answer-breakeven point (quantity)= fixed costs/ per-unit
contribution to fixed costs (price- variable costs)
Break-Even Point - Answer-The point at which the costs of producing a product equal
the revenue made from selling the product.
Break Even Analysis of Fixed Cost Investment
Example question:
- BEP quantity = Fixed-cost investment/Unit Margin
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