AS unit 1 Business Studies Questionnaire

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  • Created by: jacob
  • Created on: 23-12-13 19:40

1. Which one of these is a benefit of the break-even analysis?

  • analysis does take into account economies of scale
  • this is a very easy way of showing how profit levels change with changes in output
  • analysis assumes that all output is sold
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2. What is break even

  • when total revenue is equal to total costs
  • when total revenue is higher than total costs
  • when total costs are higher than total total revenue

3. What is a margin of safety

  • where sales can increase from their current level
  • the amount by which sales can fall from their current level before reaching the break-even point
  • A margin used to keep profit safe

4. What is meant by psychological Pricing

  • This occurs when different prices are charged for the same good or service
  • For example selling a product at £49.99 instead of £50 makes customers think of it as less than £50
  • This is the method of pricing which considers the toal cost per unit and then adds on a percentage to arrive at a final price.

5. Define what is meant by Price Skimming

  • this strategy uses a high price to enter the market. Even though the price is high, some people may still be eager to try a new product once sales from the group of people disappear the price of the product can decrease to attract new customers.
  • this strategy uses a low price to enter the market & gain market share
  • Some firms set their prices the same as their competitors

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