Which term describes the amount an enterprise charges for a good or service?
Price
What is meant by 'cost of production'?
The total amount spent on making a product, including materials and labour
Which factor to consider when pricing takes account of whether a good is new to the market, growing in popularity or losing sales?
Stage of the product lifecycle
What is meant by 'income levels of target customers'?
How much money the people an enterprise aims to sell to can afford to spend
What is the name for the money that is left once the costs of making and selling a product have been paid?
Profit
What is meant by 'price of competitor products'?
The prices that other businesses set for products that compete with the one being sold
Which of these would be included in the cost of production of a product?
The materials used and the wages of production staff
What is it called when a business sells a product for less than it costs to make?
Making a loss
A start-up sells its products to customers who have low incomes. Why should it choose a low price?
Higher prices would reduce the number of customers who can afford it
Why must the price of a product normally be higher than its costs of production?
So that the business makes a profit and can keep trading
A new business sets its price much higher than other businesses selling a similar product. What is the most likely result?
Customers will buy the product from the cheaper competitors instead
A start-up wants to attract customers away from established rivals selling a similar product. What price should it charge?
A slightly lower price than the rivals
A product has reached the decline stage of its product lifecycle. What might the business do with its price?
Cut the price to try to boost sales again
Why is the stage a product has reached in its lifecycle important when setting its price?
Because the price may need to change as sales rise or fall over time
A new business finds that making one unit of its product costs 12 pounds in materials and labour. It sells the product for 10 pounds. What does this price mean?
The business makes a loss on every unit sold
A start-up wants to find out the income levels of the customers it hopes to sell to. Which action would help it most?
Carrying out market research with people in the local area
A start-up is the only business in its area offering a particular service. Its target customers are on high incomes. Which factor is least likely to affect the price it sets?
The prices charged by competitor products
A start-up finds that its product is better quality than rival versions but costs more to make. Why might it charge a higher price than its competitors?
Some customers will pay more for better quality
The materials a start-up uses to make its product have risen in price. What is the most likely effect on the price it charges?
It may have to raise its price to keep making a profit
A start-up has just launched a brand new product and few rivals sell anything similar. Why might it charge a higher price at this stage?
Customers who want the new product may pay more for it
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