Even Though It Often Does Not Result in Profit Maximization

question 247

Multiple Choice

Even though it often does not result in profit maximization, some small firms use a cost-plus pricing strategy anyway because

• A)it is easy to use.
• B)they do not understand what marginal revenue and marginal cost mean.
• C)it is expensive to hire an economist who can determine what the profit-maximizing price is.
• D)they sell several products, each of which sells for a different price. The time and expense involved in finding the profit-maximizing price for each product are not worth the effort.

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Definitions:

Lower Control Limit

The lowest boundary in control charts that indicates the threshold below which a process may be out of control.

Population Mean

The average value of a set of characteristics within an entire population.

Confidence Interval

A breadth of values, resulting from sample statistics, presumed to harbor the value of an undetected population parameter.

Confidence Level

The probability, expressed as a percentage, that a statistical parameter (e.g., mean) for a population lies within a specified confidence interval.