A distributor of parts for turbine engines sets the initial prices of the items that she sells so that the prices conform to a gross margin of 70 percent.

(a) Describe the distinguishing differences between cost-based, competition-based, and customer-based methods of setting an initial price. Which of these three methods is this distributor using? Explain your answer.

(b) Given the distributors price-setting method, what would be her price for an item that costs her $34.50? Show your work.