Question : Which of the following statement is correct?
Statement 1: At the time of price fixation a certain amount of profit is added to the cost of production.
Statement 2: Purchasing power of customer should be taken into consideration.
Option 1: Both are true
Option 2: Both are false
Option 3: Statement 1 is true and statement 2 is false.
Option 4: Statement 1 is false and statement 2 is true.
Correct Answer: Both are true
Solution : Usually at the time of price fixation a certain amount of profit is added to the cost of production. If company's objective is to earn higher profit it may add higher amount of it. Purchasing power of customer is a factor while determining the price of a procduct. It should be taken into consideration while fixing a price of product or a services.
Hence, option A is correct.
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