The Strategy of First Determining What the Market Is Willing

question 272

Multiple Choice

The strategy of first determining what the market is willing to pay, then subtracting a desired profit margin to determine a desired cost of production is called

• A) cost-based pricing.
• B) target costing.
• C) penetration pricing.
• D) skimming pricing.

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Definitions:

Equity

The value of an ownership interest in property, including shareholders' equity in a corporation, representing assets minus liabilities.

Stock Repurchase

A company's buyback of its own shares from the marketplace, reducing the number of outstanding shares, which can increase the value of remaining shares.

Investment

The process of distributing funds or resources in anticipation of earning profits or income.

Profitable

A financial status indicating that the revenue of an entity is greater than its expenditures over a specified period, resulting in a net gain.