When Firms Use Cost-Plus Pricing in a Market

question 23

Multiple Choice

When firms use cost-plus pricing in a market,

• A)each firm determines its price based on other firms' costs and prices.
• B)it may appear as though firms are colluding in price when they actually are not.
• C)prices of different firms will diverge widely.
• D)each firm will never maximize profit as they are charging the same prices irrespective of their costs.
• E)each will sell only to its most-favored customer.

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