MGT 103 Quiz 3 (Ch.13-16) Questions
and Answers
importance of price to marketers - Answer-only variable that can be changed quickly;
related to total revenue and profit
price - Answer-the assignment of value, or the amount the consumer must exchange to
receive the offering
profit formula - Answer-total revenue - total costs OR (price x quantity sold) - total costs
understanding demand - Answer-for most products, there is an inverse relationship
between price and demand
inelastic demand - Answer-a change in price results in a little or no change in quantity
demanded
elastic demand - Answer-a change in price causes a great (opposite) change in quantity
demanded
types of costs - Answer-fixed costs and variable costs
fixed costs - Answer-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
variable costs - Answer-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
break-even point - Answer-the point at which the costs of producing a product equal the
revenue made from selling the product
breakeven point (quantity) formula - Answer-fixed costs/per-unit contribution to fixed
costs (price-variable costs)
contribution unit margin - Answer-price - variable costs
contribution margin - Answer-difference between total revenue and total variable costs
importance of price depends on... - Answer-type of product, type of target market,
purchase situation
and Answers
importance of price to marketers - Answer-only variable that can be changed quickly;
related to total revenue and profit
price - Answer-the assignment of value, or the amount the consumer must exchange to
receive the offering
profit formula - Answer-total revenue - total costs OR (price x quantity sold) - total costs
understanding demand - Answer-for most products, there is an inverse relationship
between price and demand
inelastic demand - Answer-a change in price results in a little or no change in quantity
demanded
elastic demand - Answer-a change in price causes a great (opposite) change in quantity
demanded
types of costs - Answer-fixed costs and variable costs
fixed costs - Answer-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
variable costs - Answer-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
break-even point - Answer-the point at which the costs of producing a product equal the
revenue made from selling the product
breakeven point (quantity) formula - Answer-fixed costs/per-unit contribution to fixed
costs (price-variable costs)
contribution unit margin - Answer-price - variable costs
contribution margin - Answer-difference between total revenue and total variable costs
importance of price depends on... - Answer-type of product, type of target market,
purchase situation
