Consumers are more likely to perceive the value of a product to be less than its cost if:
a. the product's price is set too high.
b. the product's manufacturer gains very little profit from the product.
c. the product has an inelastic demand.
d. the product's demand and supply attain the state of price equilibrium.
ANSWER: a
If, in consumers' minds, a price is set too high, the perceived value will be less than the cost, and sale opportunities will be lost. To earn a profit, managers must choose a price that is not too high or too lowâ€"a price that equals the perceived value to target consumers.
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