Nonprofit Organizations Pricing and Legal Environment Quiz

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Questions and Answers

What places a Price Ceiling on Prices according to the text?

Customer value of a product (correct)
Organizations costs
Understanding of the customer
Competitiveness in the marketplace

Under Australian Consumer Law, what is the clear expectation regarding pricing to consumers?

Pricing should be deceptive and discriminatory
Consumers should not know the total price before purchasing
Pricing should be explicit and transparent (correct)
Prices should be controlled by the government

What prevents activities aimed at controlling or manipulating prices?

Understanding of the customer
Number of government regulations (correct)
Customer value of a product
Organizations costs

What type of pricing is based on the level of aggregate or individual consumer demand in the market?

Demand Based Pricing (D) Signup and view all the answers

What does Price Elasticity of Demand (PEoD) measure?

Variation in quantity demanded due to changes in price (A) Signup and view all the answers

In Demand Based Pricing, when is demand considered price inelastic?

If PEoD is less than 1 (B) Signup and view all the answers

Which pricing strategy involves adding a percentage of purchase cost to determine the resale price?

Markup Pricing (D) Signup and view all the answers

What does Break Even Analysis determine?

Volume of units sold at which total costs equal total revenue (B) Signup and view all the answers

Why might Cost Based Pricing be used by an organization?

When it's difficult or impossible to determine the costs of a product until it has been made (A) Signup and view all the answers

What is the formula for calculating net profit?

$Total Revenue - Total Costs (B) Signup and view all the answers

What is the main purpose of conducting a Break Even Analysis (BEA)?

To determine the sales volume at which a company's total revenue equals its total costs (A) Signup and view all the answers

What is the main benefit of using a Marginal Analysis approach to pricing?

It helps to understand the effect on costs and revenue when a company produces and sells one more unit of a product (B) Signup and view all the answers

What is the formula for calculating the Break Even Point (BEP)?

BEP = (Fixed Cost) / (Unit Price - Unit Variable Cost) (D) Signup and view all the answers

What is the main limitation of using Marginal Analysis for pricing?

Both a and b (D) Signup and view all the answers

What is the main advantage of using Competition Pricing?

It ensures that the company maintains its sales volumes and market share (C) Signup and view all the answers

What is the main disadvantage of using Competition Pricing?

It does not guarantee profitability, as the company may not be able to match the prices charged by its competitors while still maintaining a sufficient profit margin (B) Signup and view all the answers