AP®︎ Business with Personal Finance: Topic 2.5 Flashcards

A way of determining how much to charge for a product

The costs attributed to producing and distributing one unit of a good or service

Price minus per-unit cost: per-unit profit = price − per-unit cost

The amount received from sales: revenue = price × quantity sold

Setting price primarily according to the product’s perceived value or worth to the customer

Setting price primarily in relation to rival products’ prices, whether at, below, or above them

Setting price by adding the desired per-unit profit to per-unit cost: price = per-unit cost + desired per-unit profit

Using a low initial price, possibly below per-unit cost, to gain customers and market share quickly with the intention of raising it later

A business’s ability to raise prices without risking a substantial loss of market share

How responsive the quantity customers buy is to a change in price

Elastic demand is relatively responsive to price changes; inelastic demand is relatively unresponsive to them

An agreement among competitors to set prices rather than make independent pricing decisions; illegal in the U.S. and many other countries

Sharply raising a product’s price when its demand has increased because of a crisis, a practice illegal in many jurisdictions

Charging different customer segments different prices for the same product; it is illegal when based on protected status