Which of the Following Pricing Strategies Allows a Firm to Earn

question 190

Multiple Choice

Which of the following pricing strategies allows a firm to earn economic profit?

• A)price discrimination
• B)charging a price equal to marginal cost
• C)charging a price equal to the average total cost of production
• D)charging a price equal to the average variable cost of production

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Definitions:

Direct Labor

The labor costs directly tied to the production of goods or provision of services, such as wages of workers on the manufacturing line.

Period Costs

Expenses that are not directly tied to production activities and are instead charged to the periods in which they occur, such as selling, general, and administrative expenses.

Income Statement

A financial statement that reports a company's financial performance over a specific period, showing revenue, expenses, and net income.

Factory Overhead

Factory overhead refers to the indirect manufacturing costs not directly tied to the production of a specific product, such as utilities, depreciation, and maintenance of equipment.