Busa Exam #3 Questions With Complete Solutions
Q: What is cost-based pricing? Correct Answers Setting prices
based on the cost of production plus a desired profit
margin.Example: A store sells an item for 25% more than what
it cost to make.
Q: What is everyday low pricing? Correct Answers A strategy
that keeps prices consistently low rather than relying on frequent
sales or discounts.Example:
Walmart uses EDLP to attract customers who expect low prices
every day.
Q: What is price skimming? Correct Answers -Setting a high
initial price to maximize profits from early adopters, then
lowering it over time.
Example: -New smartphones often launch at high prices, then
drop after a few months.
Question : How do you calculate a cost-based price? Correct
Answers Cost-Based Pricing is determined by adding a markup
percentage to the cost of producing a product.
Example from the slide:
Total cost = $2,000 for 100 units
Unit cost = $20
Markup = 20% × $20 = $4
Selling price = $20 + $4 = $24 per unit
Revenue = 100 × $24 = $2,400
Profit = $2,400 − $2,000 = $400
, Question : What is a generic brand? Give an example Correct
Answers A Generic Brand is a product without a widely
recognized brand name, often sold in plain packaging at a lower
price than name brands.
Examples:Cookies, medicine, paper towels, or cola sold in store-
brand or no-label packaging.
Question : What is Reference Pricing? Correct Answers
Reference pricing is a strategy where a seller shows a higher
"regular" price next to a lower sale price to make the discount
seem more attractive.
Question : What is the core product? Correct Answers Core
Product - the primary benefit or basic need the customer is
buying.
The fundamental benefit that satisfies the customer's need or
want. It can be a tangible good, service, or idea available for
purchase.👉 Example: For a car, the core product is
transportation.👉 Example: For food, the core product is hunger
satisfaction.
Question # Arm & Hammer baking soda used as a refrigerator
deodorizer Correct Answers Finding alternative uses keeps the
product relevant can extend product life cycle
Question # Product Life Cycle Correct Answers 1. Introduction
2. Growth
3. Maturity
4. Decline
Q: What is cost-based pricing? Correct Answers Setting prices
based on the cost of production plus a desired profit
margin.Example: A store sells an item for 25% more than what
it cost to make.
Q: What is everyday low pricing? Correct Answers A strategy
that keeps prices consistently low rather than relying on frequent
sales or discounts.Example:
Walmart uses EDLP to attract customers who expect low prices
every day.
Q: What is price skimming? Correct Answers -Setting a high
initial price to maximize profits from early adopters, then
lowering it over time.
Example: -New smartphones often launch at high prices, then
drop after a few months.
Question : How do you calculate a cost-based price? Correct
Answers Cost-Based Pricing is determined by adding a markup
percentage to the cost of producing a product.
Example from the slide:
Total cost = $2,000 for 100 units
Unit cost = $20
Markup = 20% × $20 = $4
Selling price = $20 + $4 = $24 per unit
Revenue = 100 × $24 = $2,400
Profit = $2,400 − $2,000 = $400
, Question : What is a generic brand? Give an example Correct
Answers A Generic Brand is a product without a widely
recognized brand name, often sold in plain packaging at a lower
price than name brands.
Examples:Cookies, medicine, paper towels, or cola sold in store-
brand or no-label packaging.
Question : What is Reference Pricing? Correct Answers
Reference pricing is a strategy where a seller shows a higher
"regular" price next to a lower sale price to make the discount
seem more attractive.
Question : What is the core product? Correct Answers Core
Product - the primary benefit or basic need the customer is
buying.
The fundamental benefit that satisfies the customer's need or
want. It can be a tangible good, service, or idea available for
purchase.👉 Example: For a car, the core product is
transportation.👉 Example: For food, the core product is hunger
satisfaction.
Question # Arm & Hammer baking soda used as a refrigerator
deodorizer Correct Answers Finding alternative uses keeps the
product relevant can extend product life cycle
Question # Product Life Cycle Correct Answers 1. Introduction
2. Growth
3. Maturity
4. Decline
