Which of the Following Presents the Strongest Reason That Mark-Up

question 38

Multiple Choice

Which of the following presents the strongest reason that mark-up pricing generally does NOT make sense?

• A)Sellers earn a fair return on their investment.
• B)By tying the price to cost,sellers simplify pricing.
• C)When all firms in the industry use this pricing method,prices tend to be similar.
• D)This method ignores demand.
• E)With a standard mark-up,consumers know when they are being overcharged.

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Definitions:

Debt-To-Equity Ratio

A financial ratio indicating the relative proportion of shareholders' equity and debt used to finance a company's assets.

Corporate Veil

A legal concept that separates the personality of a corporation from the personalities of its shareholders, and protects them from being personally liable for the company's debts and obligations.

Thin Capitalization

In corporation law, a ground for piercing the corporate veil due to the shareholders’ contributing too little capital to the corporation in relation to its needs.

Nevada Corporation

A corporation chartered in the state of Nevada, often chosen for its favorable corporate laws and tax rules.