Which of the following situations is NOT a good reason for using a high markup percentage?
A) The products have a high risk of a price reduction due to the seasonality of the goods
B) The products have low fixed costs associated with their sale
C) The products have a low elasticity of demand
D) The products have high handling and storage costs
E) The products are only sold through few retail outlets

Question

Quizplus · Accepted Answer

A high markup percentage is typically used to cover high costs of production, handling, storage, and distribution, and to generate profits. However, if the products have low fixed costs associated with their sale, a high markup percentage may result in pricing the products above the market rate, making them less competitive and less appealing to customers. Therefore, it is not a good reason to use a high markup percentage.

Which of the Following Situations Is NOT a Good Reason