Ch 10 Terms Flashcards

Ch 10 Terms Flashcards Price-The amount of something- money, time, or effort-that a buyer exchanges with a seller to obtain a product.Tariffs-Taxes on imports and exports between countries.Escalator clause-Contract section that ensures providers of goods and services do not encounter unreasonable financial hardship as a result of uncontrollable increases in the costs of or decreases in availability of something required to deliver products to customers.Survival pricing-A pricing strategy that involves lowering prices to the point at which revenue just covers costs, allowing the firm to endure during a difficult time.Marginal cost-The change in total cost that results from producing one additional unit of product.Profit margin-The amount a product sells for above the total cost of the product itself.Predatory pricing-The practice of first setting prices low with the intention of pushing competitors out of the market or keeping new competitors from entering the market, and then raising prices to normal levels.Yield management-A strategy for maximizing revenue even when a firm has a fixed amount of something (goods, services, or capacity).Fixed costs-Costs that remain constant and do not vary based on the number of units produced or sold.Underpricing-Charging someone less than they are willing to pay.Loss-leader pricing-A pricing tactic that involves selling a product at a price that causes the firm a financial loss.Marginal revenue-The change in total revenue that results from selling one additional unit of product.Price elasticity of demand-A measure of price sensitivity that gives the percentage change in quantity demanded in response to a percentage change in price (holding constant all the other determinants of demand, such as income).Unbundling-Separating out the individual goods, services, or ideas that make up a product and pricing each one individually.Price discrimination-The practice of charging different customers different prices for the same product.Elastic demand-A scenario in which demand changes significantly due to a small change in price.Variable costs-Costs that vary depending on the number of units produced or sold.

Price bundling-A strategy in which two or more products are packaged together and sold at a single price.Revenue-The result of the price charged to customers multiplied by the number of units sold.Dumping-A protectionist strategy in which a company sells its exports to another country at a lower price than it sells the same product in its domestic market.Federal Trade Commission Act (FTCA)-A law passed in 1914 that established the Federal Trade Commission and sought to prevent practices that may cause injury to customers, that cannot be reasonably avoided by customers, and that cannot be justified by other outcomes that may benefit the consumer or the idea of free competition.Inelastic demand-A situation in which a specific change in price causes only a small change in the amount purchased.gray market-The sale of branded products through legal but unauthorized distribution channels.Robinson-Patman Act-A law passed in 1936 that requires sellers to charge everyone the same price for a product.dynamic pricing-A pricing strategy that involves constantly updating prices to reflect changes in supply, demand, or market conditions.Price sensitivity-The degree to which the price of a product affects consumers' purchasing behavior.break-even analysis-The process of calculating the break-even point, which equals the sales volume needed to achieve a profit of zero.Price fixing-When two or more companies collude to set a product's price.Break-even point-The point at which the costs of producing a product equal the revenue made from selling the product.even pricing-Pricing tactic that sets prices at even dollar amounts.Name-your-own price auction-A pricing tactic in which the consumer submits a bid at the price they are willing to pay for a product or service, and the auction site conducts a search to find matches with prices set by suppliers.Wheeler-Lea act-An amendment to the Federal Trade Commission Act passed in 1938 that removed the burden of proving that unfair and deceptive practices had to injure competition.Reference prices-The prices that consumers consider reasonable and fair for a product.Volume maximization (penetration pricing) -A pricing strategy that involves setting a relatively high price for a period of time after the product launches.Profit maximizationA method of setting prices that occurs when marginal revenue equals marginal cost.Seasonal discounts-Price reductions given to customers purchasing goods or services out of season.

Profits-Revenue minus total costs.deceptive pricing-An illegal practice that involves intentionally misleading customers with price promotions.markup pricing-A pricing method in which a certain amount is added to the cost of the product to set the final price.Sherman Antitrust Act-A law passed in 1890 to eliminate monopolies and guarantee competition.Odd pricing-A pricing tactic in which a firm prices products a few cents below the next dollar amount.Prestige pricing-A pricing strategy that involves pricing a product higher than competitors to signal that it is of higher quality.