2.2.2 Price

Which of the following statements is true?

• Demand will always increase when selling prices fall

• Revenue will always increase when selling prices rise

• Prices of luxury products tend to be low to stimulate demand

• Raising the price of a product with many close substitutes will usually result in a reduction in demand

At which stage in the product life cycle might a business reduce the selling price of a product to clear stock that is no longer in demand?

• Introduction

• Growth

• Maturity

• Decline

A significant downturn in the economy has led a business to review its pricing strategy. The business aims to continue to attract customers to purchase its products, despite the intense competition in the market. Which strategy is likely to be the most appropriate in this situation?

• Increase selling prices

• Keep selling prices the same as before the economic downturn 

• Lower selling prices

• Copy the selling prices of rivals

Which of the following statements best describes the basic relationship between price and demand?

• As prices rise demand is likely to fall

• As prices rise demand is likely to stay the same

• As prices rise demand is likely to rise

• As prices fall demand is likely to stay the same

A business is likely to charge a high price when:

• There is a lot of competition in a market

• Its products are aimed at customers with a low income

• It launches a new, innovative product onto the market

• When a product is of a low quality compared to its competitors

In which stage of the product life cycle, when sales growth has slowed down after reaching a peak, would a business cut prices to attract competitors’ customers to purchase its products?

• Introduction

• Growth

• Maturity

• Decline

Customers frequently search online to find the most competitive price for goods and services.  Which of the following influences on pricing strategies is most likely to have led to this development?

• Cost of producing the product

• Legislation

• State of the economy

• Technology

Which of the following statements is true?

• Increasing prices will always increase a business’s profits

• Reducing prices will always reduce a business’s profits

• Revenue will fall if demand remains unchanged after a price reduction

• Revenue will increase if demand remains unchanged after a price cut

The stage in the product life cycle at which a low price might be charged in order to establish a product in a competitive market is:

• Introduction

• Maturity

• Decline

• Growth

Which of the following pricing strategies is most likely to be used for the launch of a new weekly collector’s magazine into a highly competitive market?

• Low price, low profit margin

• Low price, high profit margin

• High price, low profit margin

• High price, high profit margin