When a Manager Sets Prices for All Items in a Multiple

question 31

Multiple Choice

When a manager sets prices for all items in a multiple products line to cover the total cost and to produce a profit for the complete line - not necessarily for each item, it is called:

• A)price lining.
• B)customary pricing.
• C)line item pricing.
• D)product-line pricing.

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Definitions:

Producer Surplus

Producer surplus is the difference between what producers are willing to accept for a good or service versus what they actually receive, reflecting gains from trade.

Economic Rents

Earnings from a factor of production in excess of what is necessary to keep the factor in its current use, often due to limited supply or unique qualities.

Competitive Market

A market structure characterized by many buyers and sellers where no single participant has market power to influence prices significantly.

Long-Run Equilibrium

A state in which all factors of production are variable, allowing firms to enter or exit, resulting in zero economic profit for perfectly competitive firms.