Which one of the following is not matched properly ? List – IList – II I. High initial price to be…
The pair 'III and 4' (Prices to be increased for providing profit — Incremental pricing) is not matched properly. Adding a profit margin over full cost is Cost-Plus (or…
Choose your answer
Which one of the following is not matched properly ?
| List – I | List – II |
|---|---|
| I. High initial price to be lowered later | 1. Product line pricing |
| II. Prices to be proportional to cost | 2. Differential pricing |
| III. Prices to be increased for providing profit | 3. Pioneer pricing |
| IV. Prices to be different in different markets | 4. Incremental pricing |
Answer and explanation
Correct answer C
The pair 'III and 4' (Prices to be increased for providing profit — Incremental pricing) is not matched properly. Adding a profit margin over full cost is Cost-Plus (or Mark-up) pricing, whereas Incremental pricing sets prices based on incremental (variable) costs rather than full cost. By contrast, setting a high initial price to be lowered later (skimming) is a form of Pioneer pricing (I and 3), proportional cost pricing across items relates to Product line pricing (II and 1), and charging different prices in different markets is Differential pricing (IV and 2).
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UGC NET Commerce