Why Should Pricing Objectives Be Explicitly Stated

question 226

Multiple Choice

Why should pricing objectives be explicitly stated?

• A)They have a direct effect on pricing policies and the methods used to set the price.
• B)Explicitly stating these objectives provides direction for company-level objectives.
• C)Explicitly stating objectives provides legal protection for the firm.
• D)Most state laws require explicitly stating legal objectives.
• E)Firms should always choose profit-oriented pricing objectives.

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Definitions:

Fixed Expenses

Costs that do not fluctuate with changes in production volume or sales, such as rent, salaries, and insurance premiums.

Net Operating Income

The earnings generated from the primary activities of a business, before subtracting interest and tax expenses.

Break-even Point

The point at which total costs and total revenue are equal, resulting in no net loss or gain for the business.

Unit Sales

The quantity of product sold by a company in a given period.