Week 5 - Midterm Exam

1. You are considering purchasing a personal computer. What factors would affect your price sensitivity in making the decision? How would those same factors affect the price sensitivity of some personal computer buyers differently?
Some of the things I would consider are: Customer Support, Warranty, Processing Speed, Storage, Memory, Battery life, and Networking capability. Depending on the value I place on each of these factors will determine the price I am willing to pay. Because there are alternative choices to be considered (trade-offs), the best value for me would be getting a computer that provides the best fit with my goals and desires for it.
These same factors will affect the price sensitivity of other …show more content…

What effect do you think this law had on gasoline prices? Why?
By not displaying gasoline prices they have attemped to eliminate price wars and to stabilize retail gasoline prices; suppress price competition among gasoline retailers; to burden and impede interstate commerce in gasoline. This has the effect of restraining the freedom of gasoline retailers in the conduct of their business, thus eliminating competition.
6. Despite the fact that rental rates for commercial space and labor costs are generally higher in big cities than small towns; the prices of many products – such as electronics and clothing – are higher in small towns than in large cities. Can you explain this?
I think it has more to do with the market size. Usually in larger cities there is more competition and more choices, thereby leveling the playing field. In small towns where it is more likely to lose customer more rapidly therefore they have to recover costs with less sells. Prices tend to change with the change in population.
7. At what point should a company “walk away from the business?” Should a company always strive to win every bid and avoid losing business?
After a company has carefully evaluated short-term profitability and long-term implications of opportunity and accepting it only when it provides incremental contribution and does not undermine the ability to compete for more profitable business. These price buyers can be bought back at a later time. No company