What Is Cost-Plus Pricing? Why Do Some Firms Use Cost-Plus

question 253

Essay

What is cost-plus pricing? Why do some firms use cost-plus pricing even when the firms' managers have the resources to devise a pricing strategy that would result in greater profits?

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Definitions:

Normal Curve

A symmetric, bell-shaped curve that represents the distribution of many types of data; most scores are near the average, and frequencies decrease as you move away from the center.

Binomial Random Variable

A type of random variable that arises from a binomial experiment, representing the number of successes in a fixed number of independent Bernoulli trials.

Sampling Distribution

Distribution probabilities of a given statistic, ascertained through random sampling.

Standard Deviation

An indicator of the extent of variability or spread within a collection of numbers, illustrating the degree to which these numbers diverge from one another in a dataset.