Question 1

Governments typically play no role in establishing prices or regulating how buyers and sellers are allowed to behave in agreeing on prices.

Accepted Answer

Governments sometimes establish prices for certain goods or services (such as in a regulated market) and may also regulate the behavior of buyers and sellers to prevent anti-competitive behavior, fraud, or other illegal activities.

Question 2

Accepting a price discount for ordering larger quantities leads to lower levels of anticipation inventory.

Accepted Answer

Accepting a price discount for ordering larger quantities typically leads to higher levels of anticipation inventory, as businesses stock up to take advantage of the lower prices.

Question 3

Prices may not be directly related to costs in the market approach.

Accepted Answer

The market approach takes into account the prices of comparable assets, which may not necessarily reflect their costs. Prices may be influenced by supply and demand, perceived value, and other market conditions. Therefore, prices may not always be directly related to costs in the market approach.

Question 4

An exception to firm bidding allows the buyer and bidders the flexibility to clarify and define specifications and prices after the initial bids are received,and then bidders submit best-and-final-offers (BAFOs).

Accepted Answer

An exception to firm bidding known as BAFO allows the buyer and bidders to modify specifications and prices by submitting best-and-final-offers (BAFOs) after the initial bids are received.

Question 5

A payment bond protects the buyer against liens that might be granted to suppliers of material and labor to the bidder,in the event the bidder does not make proper payment to its suppliers.

Accepted Answer

A payment bond is also known as a performance bond and it ensures that the bidder fulfills all obligations of the contract and pays all suppliers and subcontractors. If the bidder fails to make payments, the suppliers and subcontractors can make claims against the payment bond.

Question 6

Canceling a contract for a technicality when market prices are falling is considered an acceptable and ethical practice.

Accepted Answer

Canceling a contract solely for a technicality when market prices are falling is generally considered unethical and may be seen as taking advantage of the other party. It is important to consider the spirit of the contract and act in good faith.

Question 7

The process for bidding in the public sector is generally similar to the private sector,although there are a few important differences.

Accepted Answer

While the overall bidding process may be similar, there are additional regulations and requirements in the public sector, such as adherence to specific procurement laws and guidelines.

Question 8

Farmers turn to marketing and production contracts when they perceive the efficacy of spot markets to be inadequate in handling their risks,and processors turn to contracts as a way to encourage farmers to produce specific products at desired times.

Accepted Answer

Farmers do turn to contracts when they feel spot markets are insufficient for their risk management, and processors use contracts to encourage farmers to produce specific products.

Question 9

Competitive bidding,in general,is the most efficient means of obtaining a fair price for items bought.

Accepted Answer

Competitive bidding allows multiple vendors to offer bids, which creates competition and drives the price down to a fair market value. This ensures that the buyer pays a reasonable price for the items purchased.

Question 10

Online reverse auctions are useful means of price determination for customized items.

Accepted Answer

Online reverse auctions are more effective for commodities and standardized items where the lowest price can be the main criterion, rather than for customized items that may require a focus on quality, specifications, and supplier capabilities.

Quiz 10: Price