MM CH 18

Which two of the following statements about switching costs are true? (Check all that apply.) Customers tend to avoid switching costs. Business consumers will switch to new products or services if costs of existing products or services go up. They can be relatively costly and dissuade business customers from switching. Most customers are not deterred by switching costs.

Customers tend to avoid switching costs. They can be relatively costly and dissuade business customers from switching.

Which of the following are characteristics of break-even analysis? (Check all that apply.) It makes it appear as if profits will decrease continually. It takes the demand curve into consideration. It makes it appear as if any item can be sold at the assumed price, which may not be the case. It makes it appear as if profits will increase continuously. It is easy to use and is useful for analyzing costs.

It makes it appear as if any item can be sold at the assumed price, which may not be the case. It makes it appear as if profits will increase continuously. It is easy to use and is useful for analyzing costs.

Why do some companies use the same markup percent as each other? Because of longstanding traditions left over from the early twentieth century So that they can "fix" the prices in order to make a large profit Because their operating expenses are alike Because their gross margins are similar

Reason: They use the same markup because their operating expenses are alike.

Aidan Haeger, marketing manager for Wilson Sporting Goods, wants to use marginal analysis to price new soccer balls. Unfortunately he does not know the exact shape of the firm's demand curve. Under these circumstances, marginal analysis ______. may be useful anyway because a profitable region generally surrounds the best price does not provide an exact level of demand and is therefore useless suggests that the only sensible approach is to follow the market leader will suggest the same price as break-even analysis

may be useful anyway because a profitable region generally surrounds the best price Reason: A profit range reassures the company that this is the right direction. Demand estimates don't have to be exact.