Doug Runs a Hardware Store

question 71

Multiple Choice

Doug runs a hardware store.He learned that customers process the price of $9.99 as significantly lower than the price of $10.00 because of the reduced digit count in the price point.Accordingly,he follows this rule to set up the prices for all products.Doug uses _____.

• A)Psychological pricing
• B)One-price strategy
• C)Variable pricing
• D)Everyday low pricing (EDLP)
• E)High/low pricing

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Definitions:

Sales Mix

The ratio of each product sold by a company to its total sales, important for understanding profitability and guiding product strategy.

Operating Loss

The result when a company's operating expenses exceed its gross profits or revenues.

Fixed Costs

Expenses that do not change with the level of production or sales activities within a certain range.

Contribution Margin

The remaining income after removing variable expenses, allocated to settle fixed expenses and create profit.