Sample Exam Questions I. Economic and Behavioral Foundations of Pricing II. Innovative Pricing Concepts and Tools III. Internet Pricing Models Example 1: EVC
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I. Economic and Behavioral
Foundations of Pricing
II. Innovative Pricing
Concepts and Tools
III. Internet Pricing
The cost of a standard seat belt to automobile manufacturers is $5.00. The labor cost to install one belt is $3.00. The new belts take 10% less time to install with a resulting labor cost of $2.70 per belt.
A marketing research study suggests that car buyers are willing to pay $50 more for a car equipped with the new and more comfortable belts. (A typical car requires five seat belts.)
= - ($1.99 – $2.49) / ($1.99 – $0.99) = 50%
= 50 % / ( 0.5 / 2.49) x 100%) = 2.5
= - (0.69 – 1.09) / (0.10 + 0.40 + 0.20 + 0.20 – 0.10) = 0.4 / 0.8 = 50%
where NR is the number of retailers
NC is the number of “clicks”
NA is the number of banner ads
where Ui is the utility of product i and the denominator is the sum of the utilities of all products available in the marketplace. Compute the market share for Sears.