Podcast
Questions and Answers
What is the definition of a 'fair price' according to the perspective of a supply manager?
What is the definition of a 'fair price' according to the perspective of a supply manager?
- The price that matches the average of all competitive prices in the market.
- The lowest possible price that ensures a reliable supply of the suitable quality, at the needed time and location. (correct)
- The highest price the market will bear, guaranteeing maximum returns for the supplier.
- A price which only covers the cost of production, excluding any profit for the supplier.
What is the long-run requirement for prices to ensure a continuous supply?
What is the long-run requirement for prices to ensure a continuous supply?
- The total revenue across all items should cover the supplier's total costs, including a reasonable profit. (correct)
- The price of each item needs to cover a percentage of fixed and variable costs, irrespective of profitability.
- The prices should be lower than those of competitors, ensuring the highest volume of sales.
- The price should only cover direct production costs of each individual item, with no regard to overall profitability.
Which statement best describes the relationship between 'fair price' and different sellers or substitute items?
Which statement best describes the relationship between 'fair price' and different sellers or substitute items?
- A fair price for one seller may be different to another, or even for an equally suitable substitute. (correct)
- A fair price is only applicable when dealing with a monopoly; otherwise, it's a market-driven price.
- A fair price for one seller must always be lower than the fair price for its substitute.
- A fair price must always be the same, regardless of the seller or substitute item.
Why might a prevailing market price NOT be considered a 'fair price'?
Why might a prevailing market price NOT be considered a 'fair price'?
What does the author suggest is important for a supply manager to determine a 'fair and just price'?
What does the author suggest is important for a supply manager to determine a 'fair and just price'?
Which of the following is NOT a factor influencing a fair price, according to the content?
Which of the following is NOT a factor influencing a fair price, according to the content?
Based on the text, what is the MOST SIGNIFICANT characteristic of a fair price, from a supply manager's perspective?
Based on the text, what is the MOST SIGNIFICANT characteristic of a fair price, from a supply manager's perspective?
According to the content, under what circumstances might the price of a specific item NOT necessarily cover its full share of costs?
According to the content, under what circumstances might the price of a specific item NOT necessarily cover its full share of costs?
Which of the following statements MOST ACCURATELY reflects the author's perspective on fair pricing?
Which of the following statements MOST ACCURATELY reflects the author's perspective on fair pricing?
What is the MAIN implication of the statement ‘a fair price to one seller for any one item may be higher than a fair price to another or for an equally satisfactory substitute item’?
What is the MAIN implication of the statement ‘a fair price to one seller for any one item may be higher than a fair price to another or for an equally satisfactory substitute item’?
Flashcards
Fair price
Fair price
A price that ensures a consistent supply of the right quality, delivered on time, while allowing the supplier to make a reasonable profit.
Total costs
Total costs
The total costs incurred by a supplier to produce and deliver a product, including a reasonable profit margin.
Fair price variation
Fair price variation
A price that may be higher for one seller compared to another, even if both items are similar. This is fair if both prices reflect the true costs involved.
Monopolized or collusive price
Monopolized or collusive price
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Black or gray market price
Black or gray market price
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What is a fair price?
What is a fair price?
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What are total costs?
What are total costs?
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Can a fair price differ between suppliers?
Can a fair price differ between suppliers?
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What is a monopolized or collusive price?
What is a monopolized or collusive price?
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What is a black or gray market price?
What is a black or gray market price?
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Study Notes
Fair Price in Supply Management
- A fair price for a supplier covers their costs, including a reasonable profit, ensuring a continuous supply of the correct quality, available when needed.
- Continuous supply is possible in the long run only from a supplier who is making a reasonable profit.
- Total supplier costs, including a reasonable profit, must be covered by total sales in the long run for supplier sustainability.
- Direct costs of individual items should be covered by price.
- A fair price for one item to one supplier might be higher than a fair price to another or for an equivalent substitute.
- The fact that a price is set by a monopolist or is established through collusion of sellers does not automatically make the price unfair or excessive.
- Prevailing market prices do not automatically equate to fair prices, especially those influenced by black markets, gray markets, or monopolistic/coercive actions.
- Evaluating a fair price involves using judgment, weighing factors such as production/services processes, cost structures, and factors in logistics such as storage, transportation, and delivery.
- A fair price is the lowest price ensuring continuous, good-quality supply when needed.
- One item may not always contribute its "full share" over a period, but the price should still cover direct costs.
- A fair price for a given item may be different among sellers or for substitute items. A buyer may pay different prices, and this is often acceptable.
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Description
This quiz explores the concept of fair pricing in supply management, emphasizing the importance of covering supplier costs while ensuring quality and availability. It discusses the impact of market dynamics on pricing and how fair prices can vary between suppliers. Evaluate your understanding of the principles of sustainable supplier relationships and fair pricing strategies.
