Edexcel A Level Business: Paper 3
Study Guide Exam And Actual Answers.
price elasticity of demand - Answer a measure of the sensitivity of demand to changes in price
Competitive Pricing - Answer When the product is priced in line with or just below competitors' prices
to try to capture more of the market.
Cost Plus Pricing - Answer adding a percentage (the mark-up) to the costs of producing a product to get
the price.
Mark-Up - Answer The percentage added to unit cost that makes a profit for a business when setting
the price
Penetration Pricing - Answer setting a low initial price on a new product to appeal immediately to the
mass market and get established in the market. Prices might be raised once established.
Predatory Pricing - Answer selling a product below cost to drive competitors out of the market
Pricing Strategy - Answer The pricing policies or methods used by a business when deciding what to
charge for its products
Product Life Cycle - Answer describes the stages a new product goes through in the marketplace:
introduction, growth, maturity, and decline and the sales that can be expected at each stage.
pyschological pricing - Answer pricing goods and services at price points that make the product appear
less expensive than it is e.g. £9.99
Price Skimming - Answer Charging the highest possible price that buyers who most desire the product
will pay before lowering the price at a later date.
, Unit Costs - Answer The same as average cost (total cost divided by output)
Competitive Market - Answer a market in which there are many buyers and many sellers so that each
has a negligible impact on the market price
Inelastic Demand - Answer A situation in which an increase or a decrease in price will not significantly
affect demand for the product. It has a value of less than 1 e.g. -0.8
Elastic Demand - Answer Goods for which changes in price have large effects on the amount
demanded. They hold a value of more than 1 e.g. -2.5
Necessity - Answer A good or service that is viewed by consumers as a high priority. Consumers tend to
be less sensitive to price changes of goods that are assumed to be necessities.
USP - Answer A feature of a product or service that allows it to be differentiated from other products in
the market
Differentiation - Answer The extent to which consumers view your product or service as being different
from those of competitors within the market e.g. branding
Price Leadership - Answer one firm sets its price first, and other firms then follow
Dynamic Pricing - Answer the practice of changing prices for products and services in real time in
response to supply and demand conditions. It is often used by the likes of hotels and airlines to reflect
demand.
Auction Sites - Answer Web-based businesses offering participants the ability to list products for
consumer bidding for a fee.
curriculum vitae (CV) - Answer A document that sets out information about person, including
qualifications, employment history and interests.
Study Guide Exam And Actual Answers.
price elasticity of demand - Answer a measure of the sensitivity of demand to changes in price
Competitive Pricing - Answer When the product is priced in line with or just below competitors' prices
to try to capture more of the market.
Cost Plus Pricing - Answer adding a percentage (the mark-up) to the costs of producing a product to get
the price.
Mark-Up - Answer The percentage added to unit cost that makes a profit for a business when setting
the price
Penetration Pricing - Answer setting a low initial price on a new product to appeal immediately to the
mass market and get established in the market. Prices might be raised once established.
Predatory Pricing - Answer selling a product below cost to drive competitors out of the market
Pricing Strategy - Answer The pricing policies or methods used by a business when deciding what to
charge for its products
Product Life Cycle - Answer describes the stages a new product goes through in the marketplace:
introduction, growth, maturity, and decline and the sales that can be expected at each stage.
pyschological pricing - Answer pricing goods and services at price points that make the product appear
less expensive than it is e.g. £9.99
Price Skimming - Answer Charging the highest possible price that buyers who most desire the product
will pay before lowering the price at a later date.
, Unit Costs - Answer The same as average cost (total cost divided by output)
Competitive Market - Answer a market in which there are many buyers and many sellers so that each
has a negligible impact on the market price
Inelastic Demand - Answer A situation in which an increase or a decrease in price will not significantly
affect demand for the product. It has a value of less than 1 e.g. -0.8
Elastic Demand - Answer Goods for which changes in price have large effects on the amount
demanded. They hold a value of more than 1 e.g. -2.5
Necessity - Answer A good or service that is viewed by consumers as a high priority. Consumers tend to
be less sensitive to price changes of goods that are assumed to be necessities.
USP - Answer A feature of a product or service that allows it to be differentiated from other products in
the market
Differentiation - Answer The extent to which consumers view your product or service as being different
from those of competitors within the market e.g. branding
Price Leadership - Answer one firm sets its price first, and other firms then follow
Dynamic Pricing - Answer the practice of changing prices for products and services in real time in
response to supply and demand conditions. It is often used by the likes of hotels and airlines to reflect
demand.
Auction Sites - Answer Web-based businesses offering participants the ability to list products for
consumer bidding for a fee.
curriculum vitae (CV) - Answer A document that sets out information about person, including
qualifications, employment history and interests.
