A Prominent Fast-Food Chain Sets a Very Low Price for Its

question 41

Multiple Choice

A prominent fast-food chain sets a very low price for its burgers with the intent of driving its competition out of business.This is an example of:

• A)predatory pricing.
• B)vertical price fixing.
• C)horizontal price fixing.
• D)price discrimination.
• E)bait and switch.

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Definitions:

Break-Even Sales

The amount of revenue required to cover both the fixed and variable costs of a business, indicating the point at which profit starts to be generated.

Margin Of Safety

The difference between actual sales and break-even sales, indicating the amount by which sales can drop before losses begin.

Percentage Of Sales

A financial ratio that compares a particular figure or total, such as profit or expense, to the total sales revenue.

Margin Of Safety

The difference between actual or projected sales and the break-even point, indicating the risk level of not covering fixed costs.