Asked by Tommie Pennington on May 26, 2024
Verified
Which of the following statements about competitive bidding is/are true?
i. The higher the price that is bid, the greater the profit, if the firm gets the contract.
ii. Bidding a higher price increases the probability of obtaining the contract.
iii. A company bidding low enough to ensure the acceptance of a contract may have bid too low to make an acceptable profit on the job.
A) i
B) ii
C) i and iii
D) All of the given answers
Competitive Bidding
A procurement process where suppliers submit bids to win a contract to supply goods or services, often leading to lower prices.
Contract Acceptance
The process by which a party agrees to the terms and conditions of a contract, signifying their willingness to be legally bound by it.
- Understand how competitive bidding and pricing strategies affect market entry and profitability.
Verified Answer
TD
Taylor DoukasMay 31, 2024
Final Answer :
C
Explanation :
Option i is true because a higher bid price increases the profit if the company gets the contract.
Option ii is not always true as the probability of obtaining the contract depends on various factors such as the quality of the proposal, experience of the bidders and the price offered.
Option iii is also true because bidding too low to win a contract may result in a profit margin that is not acceptable to the bidder.
Option ii is not always true as the probability of obtaining the contract depends on various factors such as the quality of the proposal, experience of the bidders and the price offered.
Option iii is also true because bidding too low to win a contract may result in a profit margin that is not acceptable to the bidder.
Learning Objectives
- Understand how competitive bidding and pricing strategies affect market entry and profitability.