Assume that Nike Variety tennis shoes have variable costs of $6 and sell for $24. Also assume that Nike Wimbledon tennis shoes have variable costs of $38 and sell for $48, but when fixed overhead is added, the shoe is unprofitable by $2 per pair. Which statement is most accurate regarding Nike's pricing approach with these two products?
A) Demand for each shoe is unrelated to price.
B) Nike is using a cost-plus-percentage-of-cost pricing strategy.
C) Nike is using a product-line pricing strategy.
D) Demand for each shoe is unrelated to product quality.
E) Consumers do not use price as an indication of quality.
Correct Answer:
Verified
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