Describe the perceived-value and going-rate pricing approaches
What will be an ideal response?
Perceived-value pricing approach: In this method, the company conducts market research to find out the perceived
value of the product or service by consumers. Consumers might feel that a particular product is worth a higher
price because they believe it to be superior to competitive products. Note that the price often has little to do with
the actual cost to make the product or deliver the service. The approach is often used when the product or service's
brand is seen as a status symbol, such as those of luxury watches, perfumes, and cars.
Going-rate pricing approach: Here, the firm aligns its price with those of its competitors, believing that the prices
reflect the collective wisdom of the industry. In this approach, market leaders set prices, which are then adopted by
smaller firms in the industry. This approach is often used in concentrated industries (industries dominated by a few
major players) like gasoline, airlines, and hotels. For example, in the home improvement warehouse market, prices
at market follower Lowe's are often similar to market leader Home Depot.
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In reality resource allocation generally occurs in a(n) ________ environment where the demands of one project have to be reconciled with the needs of other projects.
Fill in the blank(s) with the appropriate word(s).
As variability increases, accurate estimation decreases and the required sample size increases
Indicate whether the statement is true or false
McCoy paid a one-time special dividend of $3.40 on October 18, 2010. Suppose you bought McCoy stock for $47.00 on July 18, 2010, and sold it immediately after the dividend was paid for $63.52. What was your realized return from holding McCoy?
A) 4.24% B) 6.36% C) 33.91% D) 42.38%
For corporations, NSTCLs and NLTCLs are treated as STCLs for purposes of the carryback and carryforward rules.
Answer the following statement true (T) or false (F)