________ Is a Pricing Tactic a Firm Uses for Two

question 56

Multiple Choice

________ is a pricing tactic a firm uses for two products that work only when used together. The firm sells one item at a very low price and then makes its profit on the second high-margin item.

• A) Two-part pricing
• B) Price bundling
• C) Captive pricing
• D) Decoy pricing
• E) Keystoning

---

Definitions:

Direct Materials

Fundamental materials directly identifiable in the creation of a product.

Direct Labor

The labor costs directly tied to the production of goods or the performance of services.

Overhead Cost

Overhead cost refers to ongoing business expenses not directly linked to creating a product or service, such as rent, utilities, and administrative costs.

Actual Overhead

The total real costs incurred for indirect materials, labor, and other expenses to operate a business, not directly tied to specific products or services.