Tag: price rise/inflation

Questions Related to price rise/inflation

The ratio of current year prices to the base year price multiplied by 100 is called ________ index number.

  1. quantity

  2. price

  3. quality

  4. cost of living


Correct Option: B

_____ measures the average change in retail

prices. 

  1. WPI

  2. CPI

  3. IIP

  4. None


Correct Option: B

Pricing strategy which considers setting price after designing marketing program is termed as _______.

  1. Value based pricing

  2. Cost based pricing

  3. Discount based pricing

  4. Ceiling based pricing


Correct Option: A
Explanation:

Value-based price is a pricing strategy which sets prices primarily, but not exclusively, according to the perceived or estimated value of a product or service to the customer rather than according to the cost of the product or historical prices.

If customers perceive that price of product is greater than value then customer _______.

  1. Would get product free of cost

  2. Would get discount

  3. Would buy that product

  4. Would not buy the product


Correct Option: D
Explanation:

If customers after bergain find out the offered price of a product is more than what it is originally, that means the customer needs to give a higher price for their satisfaction. In such a case, the opportunity cost of the product is more than expected. o customers will prefer not buy such products.

Set price limit from which no more demand is accepted is termed as _______.

  1. Cost ceiling

  2. Cost floor

  3. Price ceiling

  4. Price floor


Correct Option: C
Explanation:

A price ceiling is a government-imposed price control or limit on how high a price is charged for a product. Governments intend price ceilings to protect consumers from conditions that could make commodities prohibitively expensive. Such conditions can occur during periods of high inflation or in monopolistic markets.

Company will face low sales and low markups if company sets its product prices _____.

  1. Too high

  2. Too low

  3. Too discount

  4. None of above


Correct Option: A
Explanation:

If any company sets the price of its product or service too high, in the sense it is higher than others, even if they aren't compromising on other factors such as quality etc, the company will face low sales and low markup by the consumers. That is because the consumers will tend to buy from ones who have lesser prices at the best opportunity cost of other factors.

Third step of value based pricing is to ______.

  1. Assess needs of customer

  2. Set target price

  3. Determine incurred costs

  4. Design product


Correct Option: C
Explanation:

Value based pricing is the strategy which sets prices primarily, but not exclusively, according to the perceived or estimated value of a product or service to the customer rather than according to the cost of the product or its historical prices. So once the customer needs are found out and a target price is set, the incurred costs behind those products need to be found out.

Third step of cost-based pricing is to _______.

  1. Design a product

  2. Determine cost of product

  3. Set price based on cost

  4. Convince buyer about products value


Correct Option: C
Explanation:

Cost based pricing is the easiest way to calculate what a product should be priced at. This appears in two forms: full cost pricing and direct-cost pricing. So after designing the product, determining the cost of the product, one must set the price of the product as its determined cost.

Only element which is the cause of income for company is ______.

  1. Price

  2. Tax

  3. Discount

  4. Value added tax


Correct Option: A
Explanation:

The are many reasons behind the income of a company. But before any other reason, the company must design its product or service and set a reasonable price to it. Any certain change to the price can affect the set of customers to that company. So, price is the deriving element towards the cause of income for company.

A strategy that ensures price target is to be met is termed as _______.

  1. Target costing

  2. Marginal costing

  3. Demand based costing

  4. Learning curve costing


Correct Option: A
Explanation:

Target costing is an approach to determine a product's life-cycle cost which should be sufficient to develop specified functionality and quality, while ensuring its desired profit. It involves setting a target cost by subtracting a desired profit margin from a competitive market price.