In Cost-Plus Pricing, the Markup Percentage Is Computed by Dividing

question 78

Multiple Choice

In cost-plus pricing, the markup percentage is computed by dividing the desired ROI per unit by the

• A) fixed cost per unit.
• B) total cost per unit.
• C) total manufacturing cost per unit.
• D) variable cost per unit.

---

Definitions:

Moral Hazard

The situation where one party is more likely to take risks because another party bears the cost of those risks.

Adverse Selection

A situation where asymmetric information results in high-risk individuals being more likely to participate in a contract or agreement, potentially leading to market inefficiency.

Life Insurance

A contract between an insurer and a policyholder where the insurer promises to pay a designated beneficiary a sum of money upon the death of the insured person.

Productivity

A measure of the efficiency of a person, machine, system, etc., in converting inputs into useful outputs.