The Market Approach to Pricing

question 10

Multiple Choice

The market approach to pricing:

• A)means prices are set to cover direct costs,contribute to indirect costs,and attain a profit.
• B)is the only defensible pricing mechanism for ethical companies to use.
• C)implies that prices are set based on what the market will bear.
• D)means that prices are adjusted regularly to ensure that the seller recoups all of its marketing costs.
• E)implies that market analysis is the only technique that should be employed to negotiate prices.

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Definitions:

Market Value

The prevailing market rate at which a service or asset is available for purchase or sale.

Paid-in Capital

The total amount of money investors have contributed to a company in exchange for shares of stock.

Stock Dividend

A dividend payment made in the form of additional shares rather than cash, increasing the number of shares owned by shareholders.

Stockholders' Equity

The residual interest or ownership in the assets of a corporation after deducting liabilities, often referred to as shareholders' equity.