When a Seller Determines the Selling Price by Adding to Cost

question 127

Multiple Choice

When a seller determines the selling price by adding to cost an amount for profit and expenses not previously accounted for,which type of pricing is the seller using?

• A)profit maximization
• B)demand oriented
• C)target return
• D)markup

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Definitions:

Barriers to Entry

Economic, procedural, regulatory, or technological factors that obstruct or restrict the ability of new competitors to enter a market.

Economic Profits

The surplus achieved when revenue generated from business activities exceeds both explicit and implicit costs.

Long Run

A period of time in which all factors of production and costs are variable, and firms can adjust all inputs.

Competitive Price-searcher

A market condition where sellers actively set prices and seek to differentiate their products in an effort to attract consumers in a competitive environment.