A Negative Aspect of Selecting Unit Volume as a Pricing

question 200

Multiple Choice

A negative aspect of selecting unit volume as a pricing objective is that

• A) production often cannot keep up with demand.
• B) there are increased carrying costs with extensive inventories.
• C) if price reductions are used to achieve volume objectives, it can sometimes come at the expense of profits.
• D) it can create competition between divisions within the organization itself, causing conflicts over the allocation of resources.
• E) it always positively correlates with a sales revenue objective.

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Definitions:

Tax

Compulsory financial charges or other types of levy imposed upon a taxpayer by a governmental organization in order to fund government spending and various public expenditures.

Producer Surplus

The differentiation between the accepted selling price by producers for a product or service and the final earning.

Consumer Surplus

The gap between what consumers are ready and financially able to spend on a good or service and what they actually spend.

Tax

An obligatory fee or some other type of financial imposition placed on a taxpayer by a government organization, designed to cover the cost of government activities and diverse expenditures in public services.