EDEXCEL A LEVEL BUSINESS: PAPER 3 (ADVANCED
INFORMATION) EXAM QUESTIONS AND ANSWERS 100%
CORRECT!
, 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
INFORMATION) EXAM QUESTIONS AND ANSWERS 100%
CORRECT!
, 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
