IGCSE Business Studies: Price (Lesson 1)

Pricing decisions are only made for new products entering the market.

• True

• False

If a new product is of high quality, it is likely to have...

• a high price

• a low price

• a price similar to that of competitors' products

• no price - it will be given away in a BOGOF promotion

Which of the following is NOT a reason for a business to adopt a new pricing strategy?

• it is trying to enter a new market

• it wants to make sure all its costs are covered

• it wants to decrease its profits

• it is trying to increase its market share

If the product is branded, it will likely be aimed at a particular market segment.

• True

• False

A shoe manufacturer produces 30,000 pairs of shoes at a total cost of $75,000. What is the cost of producing one pair of shoes?

• $0.40

• $4.00

• $0.25

• $2.50

An ice cream manufacturer produces vanilla ice cream at a cost of $0.90 per litre. Assuming the manufacturer uses a markup of 200%, what is the the selling price per litre?

• $18.00

• $1.80

• $270

• $2.70

Which of the following is NOT a limitation of cost-plus pricing?

• Each product earns a profit for the business

• The business could lose customers if the selling price is higher than competitors' prices

• There is no incentive for the business to become more efficient

• An overall profit will only be made if enough units are sold

Cost-plus pricing estimates how many of a product will be sold, calculates a total cost, then adds a mark-up to arrive at the selling price of the product.

• True

• False