Liquiction Pool and Patio Inc. is a company known for its quality pool installations, excellent customer service, and reasonable prices
Given the demand, Liquiction could price its products higher, but it prefers to price its products such that it will earn a reasonable level of profits. Liquiction seems to base its pricing policy on:
a. profit maximization.
b. earning satisfactory profits.
c. creating retained earnings.
d. maintaining a status quo pricing.
ANSWER: b
Liquiction seems to base its pricing policy on earning satisfactory profits. Satisfactory profits are a reasonable level of profits. Rather than maximizing profits, many organizations strive for profits that are satisfactory to the stockholders and managementâ€"in other words, a level of profits consistent with the level of risk an organization faces.
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