Question

Price policy is in favour of

• A. Consumer
• B. Government
• C. Producer
• D. All of them

Hint:

Think of pricing as a three-legged stool. The legs are the company (producer), the customer (consumer), and the society (government). If any leg is too short or too long, the stool will be unstable.

Answer 1

The Correct Option is D

Step 1: Understanding the Question:
The question asks whose interests a well-formulated price policy should serve.
Step 2: Key Concept:
A price policy is a company's strategic approach to setting prices for its products or services. A sustainable and effective policy must balance the needs and objectives of multiple stakeholders.
Step 3: Detailed Explanation:
An effective price policy must consider the interests of:

(C) Producer: The price must be high enough to cover all costs (production, marketing, administrative) and generate a reasonable profit for the business to survive, grow, and reward its investors.

(A) Consumer: The price must be perceived as fair and offering good value for money. If consumers feel the price is too high for the value received, they will not buy the product.

(B) Government: The price policy must comply with legal and regulatory guidelines. This includes avoiding anti-competitive practices like price-fixing or predatory pricing. The government also has an interest in prices as they affect inflation and social welfare.

A policy that favors only one group is unsustainable. For example, a policy that only favors the producer with very high prices will alienate consumers. A policy that only favors consumers with very low prices may bankrupt the producer. Therefore, a balanced approach is essential.
Step 4: Final Answer:
A good price policy must balance the interests of the producer, consumer, and government. Thus, it is in favour of all of them. The correct answer is (D).