A Practical Approach That Is Frequently Used by Managers When

question 56

Multiple Choice

A practical approach that is frequently used by managers when setting normal long-run prices is

• A) the cost-plus approach
• B) the economic theory approach
• C) the price graph approach
• D) price skimming

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Definitions:

Deadweight Loss

A loss of economic efficiency that occurs when the equilibrium outcome is not achievable or not achieved in a market.

Administrative Cost

Expenses related to the general operation of a business, including office supplies, salaries of non-production staff, and rent.

Efficiency

The extent to which resources are utilized to their maximum potential, minimizing waste and maximizing output or outcomes.

Proportional Income Tax

A tax system where the tax rate remains constant regardless of the amount of income earned, meaning taxpayers pay the same percentage of their income in taxes.