The Market Approach to Pricing

question 17

Multiple Choice

The market approach to pricing:

• A) means prices are set to cover direct costs, contribute to indirect, and attain a profit.
• B) is the only defensible pricing mechanism for ethical companies to use.
• C) implies that prices are set based on what the market will bear.
• D) means that prices are adjusted regularly to ensure that the selling organization recoups all its market costs.
• E) implies that market analysis is the only technique that should be employed to negotiate prices.

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Definitions:

Voidable Contract

A legally enforceable agreement that may be declared void at the option of one of the parties due to certain defects or circumstances.

Executory

Not yet executed; not yet fully performed, completed, fulfilled, or carried out; to be performed wholly or in part.

Express Contract

A contract in which terms are explicitly stated and agreed upon by the parties, either orally or in writing.

Mutual Agreement

A common understanding or an arrangement that is accepted by all parties to a transaction or contract.