Adding a percentage (the mark up) to the costs of producing a product to get the price.

• A. Penetration pricing
• B. Cost plus pricing
• C. Pricing strategy
• D. Mark up

Answer: (D)

This question tests understanding of how price is set by adding a percentage to cost, which is called a markup. The markup is the extra amount added to the cost to cover expenses and profit, and when written as a percentage you get the selling price using cost × (1 + markup%). For example, if cost is £30 and the markup is 25%, the price becomes £37.50. This focuses on the specific addition to cost, not on broader ideas like penetrating pricing (which aims to win market share with a low price) or generic pricing strategy. Cost-plus pricing is closely related, since it uses a markup to determine price, but the term described by the scenario is the markup itself—the percentage added to cost to arrive at the selling price.