A blender manufacturer with excess capacity has analyzed its costs and found that the lowest price it can accept for a major order (and still attain its profit goal) is $10 per unit. This illustrates
A) a price ceiling.
B) penetration pricing.
C) a price floor.
D) variable pricing.

Question

Quizplus · Accepted Answer

A price floor is the minimum price at which a product can be sold while still making a profit or meeting financial goals. In this scenario, the manufacturer has determined that $10 per unit is the lowest price at which they can sell their blenders to achieve their profit objectives, which aligns with the concept of a price floor.

A Blender Manufacturer with Excess Capacity Has Analyzed Its Costs