Practice Quiz

CLEP Marketing

Category - Pricing

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Price is an important part of a marketing mix and in the profit determination of a product or service. In the following equation for profit calculation, what component is represented by the letter “A”:
Profit = (Price x A) - Total costs
  1. Operations cost
  2. Promotions budget
  3. Markup amount
  4. Raw supplies bought
  5. Quantity sold
Explanation
Answer: E - Price is an important part of a marketing mix and in the profit determination of a product or service. In the equation for profit calculation, the letter “A” represents quantity sold. Product/service prices are multiplied by quantity sold to determine total return. Consequently, pricing is important in determining a company’s financial performance and market share. If a company like Apple prices its products higher than competitors, it increases its overall market position.
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