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

question 5

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