Chapter 14 EOU and Competitive Pricing Pretest

Competition between suppliers pushes

• prices lower

• supply higher

• consumers to buy less

• prices higher

Which is not a benefit of competition?

• lower prices

• better quality

• less consumer choice

• innovation

Entrepreneurs who consistently make a profit over time can

• invest in other businesses

• offer more products

• donate profits to benefit society

• all of the above

The "profit motive" is

• profit calculated as a percentage of costs

• the money left over when sales are subtracted from costs

• the economics of one unit

• the reason entrepreneurs take on business risk

When parents rush to the mall to buy a popular toy for the holidays,

• they create competition among consumers

• the supply of the toy may fall

• suppliers of the toy may charge a higher price for it

• all of the above

A business makes a profit when

• competition is high

• operating costs are higher than money from sales

• money from sales is lower than overhead

• money from sales is greater than money spent on expenses

The strategy of basing your price around what your competitors charge is called

• demand pricing

• competition-based pricing

• cost-plus pricing

• value-based pricing

The economics of one unit is

• the calculation of the profit or loss a business makes on each unit sold

• the difference between the sales price of one unit and the cost of that unit

• the calculation of the profit or loss on one unit of sale

• all of the above

If a cupcake store owner makes $3.00 in profit on every $6.00 cupcake sold, her profit percentage is

• 30%

• 50%

• 60%

• none of the above

If the cupcake store owner in the above example raises her per unit price to $6.50, her profit percentage becomes

• 46%

• 65%

• 50%

• 32%