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Questions and Answers
What is the primary basis for determining the price of a product in cost-plus pricing?
What is the primary basis for determining the price of a product in cost-plus pricing?
- Average cost of production (correct)
- Market demand
- Competitor actions
- Desired profit margin
What is the purpose of the mark-up in cost-plus pricing?
What is the purpose of the mark-up in cost-plus pricing?
- To calculate the average cost
- To cover production costs
- To determine the selling price
- To generate profit (correct)
What is a potential limitation of cost-plus pricing?
What is a potential limitation of cost-plus pricing?
- It does not account for competitor actions
- It does not consider the state of the market (correct)
- It does not generate enough profit
- It is not used by many businesses
What is the main goal of penetration pricing?
What is the main goal of penetration pricing?
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What is a benefit of producing on a large scale, as mentioned in the context of penetration pricing?
What is a benefit of producing on a large scale, as mentioned in the context of penetration pricing?
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Which pricing strategy is most effective when demand is price sensitive?
Which pricing strategy is most effective when demand is price sensitive?
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What is the main goal of predatory pricing?
What is the main goal of predatory pricing?
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In which situation is a price-skimming strategy most appropriate?
In which situation is a price-skimming strategy most appropriate?
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What is the purpose of a loss leader?
What is the purpose of a loss leader?
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When is a low entry price likely to be beneficial to a business?
When is a low entry price likely to be beneficial to a business?
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