When Managers Take Advantage of an Unusual Event by Charging

question 26

Multiple Choice

When managers take advantage of an unusual event by charging prices that consumers believe are too high, they are practicing:

• A) Price gouging
• B) Cost-based pricing
• C) Predatory pricing
• D) Illegal pricing

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Definitions:

Selling Price

The amount of money for which a product or service is sold to customers.

Contribution Margin Ratio

A financial metric that measures how effectively a company can cover its variable costs with revenue, calculated as contribution margin divided by sales revenue.

Variable Cost Per Unit

The cost that changes in proportion to changes in the level of output or activity.

Income From Operations

The profit realized from a business's ongoing core business operations, excluding deductions of interest and taxes.