Practice Quiz

CLEP Principles of Marketing Exam Prep

Category - CLEP Marketing

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Marketers realize that price markups are not desirable because
  1. They flatten pricing differences among retailers
  2. They reduce the profit margin for sellers
  3. They reduce the range of products available
  4. They promote consumer resentment at increased prices
  5. They ignore consumer demand
Explanation
Answer: E - Marketers realize that price markups are not desirable because they ignore consumer demand. Markup is calculated as the difference between the cost of manufacturing a product or providing a service and its selling price. Manufacturers and businesses add a markup to turn a profit from their product or service. Despite their convenience, price markups are often not desirable because they lead to suboptimal prices (either too low or too high). Suboptimal pricing can lead to the product not selling well and disconnects it from consumer demand.
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