The Simple Form of the "Theory of Limit Pricing" Postulates

question 43

Multiple Choice

The simple form of the "theory of limit pricing" postulates that:

• A)A firm in a strong market position can obscure superior performance by limiting the release of information about prices
• B)A firm always tries to limit price increases to what its customers can afford
• C)There is a natural and objective limit to prices, imposed by the market
• D)A firm in a strong market position sets prices at a level that dissuades entrants from entering

---

Definitions:

Cost Of Goods Sold

Direct costs attributable to the production of goods sold by a company, including materials, labor, and overhead.

Merchandise

Goods that are purchased, stored, and sold by a business in the ordinary course of its operations, often referred to as inventory.

Gross Profit Rate

The gross profit rate, also known as gross profit margin, is the ratio of gross profit (sales minus cost of goods sold) to sales, expressed as a percentage.

Merchandise Available

The total quantity of goods available for sale, including beginning inventory plus purchases made during the period.