Please choose one answer and clearly identify the choice made!!

The market approach implies that prices may not be directly related to cost. Generally, when demand is high relative to supply, prices are expected to rise; when demand is low relative to supply, prices should decline. The market approach to pricing:

A::means prices are set to cover direct costs, contribute to indirect costs, and attain a profit.

B::implies that market analysis is the only technique that should be employed to negotiate prices.

C::implies that prices are set based on what the market will bear.

D::is the only defensible pricing mechanism for ethical companies to use.

The Sherman Antitrust Act of 1890 states that any combination, conspiracy, or collusion with the intent of restricting trade in interstate commerce is illegal. The Sherman Antitrust Act states it is illegal for suppliers:

A::to get together to set prices (price fixing) or determine the terms and conditions under which they will sell.

B::to sell the same item, in the same quantity, to all customers at the same price.

C::to meet competition by adjusting price.

D::to adjust price so that profit does not exceed a set percentage of direct costs.

Fairness implies benefits to both (all) parties. For the buyer, a fair price motivates the seller to provide the right goods or services (quality) in the right quantity to the right time and place at the right service level. For the seller, a fair price means that in return for meeting the buyers requirements, the sellers costs are covered and a reasonable profit is generated. A fair price:

A::is when all sellers of equal goods or services receive the same per unit price.

B::is based on market conditions, and cost structure has no bearing on the determination of a fair price.

C::is based on the cost to produce an item or service without consideration for the suppliers profit margin.

D::is the lowest price that ensures a continuous supply of the proper quality where and when needed and at which the supplier makes a reasonable profit.

Direct costs can be specifically and accurately assigned to a given unit of production or a specific identifiable task performed by a service provider. For example in manufacturing, direct material is 10 pounds of steel or direct labor is 30 minutes of a persons time on a machine or assembly line. Most direct costs are:

A::overhead costs.

B::general and administrative costs.

C::fixed costs.

D::variable costs.