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Consumer Surplus and Willingness to Pay quiz #7 Flashcards

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Consumer Surplus and Willingness to Pay quiz #7
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  • Which of the following descriptions best represents targeting a demographic segment?
    Marketing products to consumers based on age, income, or education.
  • Which of the following statements regarding customer value-based pricing is correct?
    It sets prices based on consumers' perceived value rather than cost.
  • Consumers are diverse with distinct needs and wants, resulting in what?
    Market segmentation.
  • As companies become more market-centered, a customer-focused sales force does what?
    Focuses on building relationships and meeting customer needs.
  • Positioning assumes consumers compare products based on what?
    Perceived value and benefits.
  • Some firms have an incentive to advertise because they sell a what?
    Differentiated product.
  • One way that companies can capture value from customers is through what?
    Price discrimination or bundling.
  • What happens to consumer surplus when a firm engages in perfect price discrimination?
    Consumer surplus is reduced to zero; the firm captures all surplus.
  • Buyers with strong bargaining power can limit the industry profitability by doing what?
    Forcing prices down or demanding better terms.
  • A firm's goal in offering a trade discount is to _____.
    Encourage larger purchases or reward loyal customers.
  • Characteristics of a product that satisfy wants and needs are called what?
    Product features or attributes.
  • The group of consumers most likely to purchase a particular product are called a what?
    Target market.
  • The maximum amount you are willing to spend for an item is called what?
    Reservation price or willingness to pay.
  • ______ is a customer's perception of the benefits received compared to the costs.
    Value.
  • Product characteristics that satisfy customer needs are called what?
    Features or benefits.
  • Dividing the market by certain preferences or lifestyle choices is called what?
    Psychographic segmentation.
  • Both producers and retailers tend to promote shopping products. Why?
    To increase consumer awareness and demand.
  • In making a decision, a consumer's evoked set consists of the ______.
    Brands or products considered as purchase options.
  • An expectation of a lower price in the future will have what effect?
    Decrease current demand.
  • When money is acting as a store of value, it allows an individual to do what?
    Save purchasing power for future use.
  • Consumers are diverse with distinct needs and wants, resulting in what?
    Market segmentation.
  • As companies become more market-centered, a customer-focused sales force does what?
    Focuses on building long-term customer relationships.
  • The personal likes and dislikes that make buyers more or less inclined to purchase a good are called what?
    Preferences.
  • You'll have less freedom with your money if you . . .
    Spend more than you earn or accumulate debt.
  • When you are deciding what to buy, you should not...
    Ignore your budget or buy without considering value.
  • Milton Friedman argued that consumers are more likely to alter their behavior based on what?
    Permanent changes in income rather than temporary changes.
  • The price of a single item within a group of items is known as the ______________ of the item.
    Unit price.
  • A consumer might respond to a negative incentive by doing what?
    Reducing or avoiding the undesired behavior.
  • People invest in the stock market because:
    They seek to earn a return on their savings.
  • What is the most direct cause of customer loyalty?
    Consistently high value and satisfaction from purchases.
  • Consumers having more money to purchase computers will most likely result in what?
    An increase in demand for computers.
  • When you buy in bulk, the price per individual item does what?
    Decreases.
  • Cost is a major factor for consumers when purchasing health products. True or false?
    True.
  • When investors purchase a commodity, they believe what?
    The commodity's value will increase in the future.
  • People might choose to use a debit card rather than cash for purchases because:
    It is more convenient and provides a record of spending.
  • Americans spend over $2,100 a year on ______________.
    Average personal consumption expenditures (such as food or entertainment).
  • Savers have a tendency to be . . .
    More future-oriented and cautious with spending.
  • Money functions as a store of value if it allows you to do what?
    Save purchasing power for future use.
  • One factor that indicates a developed economy's standard of living is its what?
    Per capita income or GDP per capita.
  • You pay more for insurance coverage if you drive a lot because…
    Higher usage increases risk, raising premiums.