Chapter 1 OTM 300 - UW Madison || 100% Accurate Answers.
supply correct answers products or services that a business offers to its customers
demand correct answers the set of customers for whom a specific product or service is the best
choice (the utility maximizing choice)
the goal is to maximize utility to the customer will choose your company over a competitor
utility correct answers a measure of the strength of customer preferences for a given product or
service
measure of desire
3 components of utility correct answers consumption utility
price
inconvenience
consumer utility function correct answers = consumption utility + price + inconvenience
consumption utility correct answers a measure of how much you like a product or service,
ignoring the effects of price and of the inconvenience of obtaining the product or service
2 components of consumption utility correct answers performance attributes
fit
performance attributes correct answers features of the product or service that most people agree
are more desirable
, consumers often have similar ideas of the ideal
fit correct answers captures how well the product or service matches with the unique
characteristics of a given consumer
not all consumers agree here; heterogeneous preferences
price correct answers the total cost of owning the product or receiving the service
includes expenses such as shipping or financing and discounts
heterogeneous preferences correct answers the fact that not all consumers have the same utility
function
inconvenience (transaction costs) correct answers the reduction in utility that results from the
effort of obtaining the product or service
2 components of inconvenience correct answers location
timing
location correct answers the place where a consumer can obtain the product or service
the further something is, the more inconvenient
timing correct answers the amount of time that passes between the consumer ordering the
product or service and the consumer receiving the product or service
supply correct answers products or services that a business offers to its customers
demand correct answers the set of customers for whom a specific product or service is the best
choice (the utility maximizing choice)
the goal is to maximize utility to the customer will choose your company over a competitor
utility correct answers a measure of the strength of customer preferences for a given product or
service
measure of desire
3 components of utility correct answers consumption utility
price
inconvenience
consumer utility function correct answers = consumption utility + price + inconvenience
consumption utility correct answers a measure of how much you like a product or service,
ignoring the effects of price and of the inconvenience of obtaining the product or service
2 components of consumption utility correct answers performance attributes
fit
performance attributes correct answers features of the product or service that most people agree
are more desirable
, consumers often have similar ideas of the ideal
fit correct answers captures how well the product or service matches with the unique
characteristics of a given consumer
not all consumers agree here; heterogeneous preferences
price correct answers the total cost of owning the product or receiving the service
includes expenses such as shipping or financing and discounts
heterogeneous preferences correct answers the fact that not all consumers have the same utility
function
inconvenience (transaction costs) correct answers the reduction in utility that results from the
effort of obtaining the product or service
2 components of inconvenience correct answers location
timing
location correct answers the place where a consumer can obtain the product or service
the further something is, the more inconvenient
timing correct answers the amount of time that passes between the consumer ordering the
product or service and the consumer receiving the product or service
