Q3)Which of the following describes a switching cost? Select one: a)Sellers find

Question

Q3)Which of the following describes a switching cost?

Select one:

a)Sellers find it difficult to stop customers from switching to alternative sellers, so the spend more in order to keep their existing customers.

b)Customers find it difficult to switch to an alternative seller once they have started to buy from one seller.

c)All of these are correct.

d)Customers face added costs due to the advertising expenses of the firm.

q4) The main reason for companies to bundle their product is to:

Select one:

a)None of these is correct.

b)make new customers stick with the product.

c)extract additional profits from a customer base with homogeneous product demands.

d)extract additional profits from a customer base with heterogeneous product demands.

Q5) If a gym charges a sign-up fee, and then charges a set amount per week as well, this is an example of:

Select one:

a)bundling.

b)multi-period pricing.

c)block pricing.

d)two-part pricing.

Explanation / Answer

Q3) Option b. Switching costs refers to the costs that a consumer incurs as a result of changing brands, suppliers or products.
Q4) Option d. The bundle pricing is used to derive more profits by providing discounts to consumers by offering different products.
Q5) Option d. Two-part pricing is used to extract all the consumer surplus

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