The Strategy of Charging Prices Based on Consumer Demand Rather

question 304

Multiple Choice

The strategy of charging prices based on consumer demand rather than cost or a predetermined profit margin represents

• A) competition-based pricing.
• B) cost-based pricing.
• C) target orientation.
• D) demand-oriented pricing.

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Definitions:

Appraisal Costs

Expenses associated with evaluating and inspecting products to ensure they meet quality and compliance standards.

Internal Failure Costs

Internal Failure Costs are expenses incurred when a product fails to meet quality standards before it is shipped to customers, including scrap, rework, and downtime.

External Failure Costs

Costs that arise when a product fails to meet quality standards after being delivered to the customer, including returns, repairs, and warranty claims.

Quality Cost Report

A document detailing the costs associated with ensuring the quality of products or services, including prevention, appraisal, and failure costs.