Although Break-Even Analysis and Cost-Plus Pricing Are Important Tools in Setting

question 9

Multiple Choice

Although break-even analysis and cost-plus pricing are important tools in setting prices based on the firm's cost structure, they should never be the driving force behind pricing strategy. Why?

• A) Because firms want to make a profit, not just break even.
• B) Because customer expectations are far more important in setting prices.
• C) Because prices should be based on demand, not costs.
• D) Because different firms have different cost structures.
• E) Because competitor's prices are far more important in setting prices.

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