Which of the Following Is Not an Advantage of Cost-Plus

question 134

Multiple Choice

Which of the following is not an advantage of cost-plus pricing?

• A)It is easy to calculate.
• B)It requires little information.
• C)If a firm is selling multiple products, it ensures that the firm's prices will cover costs that are difficult to assign to one product.
• D)It ensures that the firm will maximize its profits.

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Definitions:

Average Total Cost

The total cost of production divided by the total quantity produced, representing the average cost per unit.

Long Run

A time period in economic analysis during which all factors of production and costs can be variable, allowing for full adjustment to changes in market conditions.

Variable Costs

Costs that vary directly with the level of production or output, such as materials and labor.

Fixed Costs

Costs that do not change with the level of output or sales, such as rent or salaries.