7/4/25, 9:28
PM
MBA 706 Module 4 Exam questions and answers
with complete solutions verified latest update
graded a++
Cost based (company),
competitor based
Pricing Strategies (intermediate value),
customer based (sense of
products value)
increase as price increases;
increase as fixed or variable costs decrease
profit
profit driver
a measure of the
sensitivity of demand to
changes in price;
inelastic: demand not
affected much by
price drop/increase
elastic: demand is
affected by price
drop/increase; If E > 1, as
price elasticity in the left plot, demand is
said to be elastic. Price
and revenue go in
1/
7
, 7/4/25, 9:28
PM
opposite directions: With
a price drop, revenues
shoot up; with a price
increase, revenues fall
off.
If 0 ≤ E < 1, as in the
right plot, demand is
inelastic. Revenue
follows price in the same
direction: If price goes
up, revenue goes up; if
price goes down, so do
revenues.
If E = 1 , demand is said
to be unitary. Prices goes
up or down, but revenues
remain about the same.
1. Cost-plus pricing: mark-up above average
cost
2. Loss leaders: sell below cost to bring
in customers who will purchase other
low pricing comes products
from: 3. The strategy of "market penetration": price low
to attract volume:
a) Early in the product life cycle to generate buzz
and demand
b) Late in the product life cycle to milk profits
before the brand dies
4. Nearly predatory: price low enough to
2/
7
PM
MBA 706 Module 4 Exam questions and answers
with complete solutions verified latest update
graded a++
Cost based (company),
competitor based
Pricing Strategies (intermediate value),
customer based (sense of
products value)
increase as price increases;
increase as fixed or variable costs decrease
profit
profit driver
a measure of the
sensitivity of demand to
changes in price;
inelastic: demand not
affected much by
price drop/increase
elastic: demand is
affected by price
drop/increase; If E > 1, as
price elasticity in the left plot, demand is
said to be elastic. Price
and revenue go in
1/
7
, 7/4/25, 9:28
PM
opposite directions: With
a price drop, revenues
shoot up; with a price
increase, revenues fall
off.
If 0 ≤ E < 1, as in the
right plot, demand is
inelastic. Revenue
follows price in the same
direction: If price goes
up, revenue goes up; if
price goes down, so do
revenues.
If E = 1 , demand is said
to be unitary. Prices goes
up or down, but revenues
remain about the same.
1. Cost-plus pricing: mark-up above average
cost
2. Loss leaders: sell below cost to bring
in customers who will purchase other
low pricing comes products
from: 3. The strategy of "market penetration": price low
to attract volume:
a) Early in the product life cycle to generate buzz
and demand
b) Late in the product life cycle to milk profits
before the brand dies
4. Nearly predatory: price low enough to
2/
7
