Which of the following statements about markup pricing is correct?
A) The use of similar markups reduces price competition.
B) Markup pricing is inconvenient to use.
C) Markup pricing results in a high price when demand is high and a low price when demand is low.
D) Markup pricing is a demand-based pricing method.
E) Using markups makes pricing a time-consuming, difficult process.

Question

Quizplus · Accepted Answer

The use of similar markups among competitors can create price stability and reduce price competition, since all competitors are pricing their products similarly.

Note: the other answer choices are incorrect. Markup pricing is a commonly used and convenient pricing method, it is not a demand-based pricing method, and using markups does not necessarily make pricing more time-consuming or difficult. Also, Markup pricing generally results in a higher price when demand is low and a lower price when demand is high, as opposed to the statement given in choice C.

Which of the Following Statements About Markup Pricing Is Correct