After reading this chapter you should be able to:

1. Identify the elements that make up a price.
2. Describe how to establish the initial approximate price level using demand-oriented, cost-oriented, profitoriented, and competition-oriented approaches.
3. Explain what a demand curve is and the role of revenues in pricing decisions.
4. Explain the role of costs in pricing decisions.
5. Describe how various combinations of price, fixed cost, and unit variable cost affect a firm's break-even point.
6. Recognize the objectives a firm has in setting prices and the constraints that restrict the range of prices a firm can charge.
7. Describe the steps taken in setting a final price.