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What Is Cost-Plus Pricing? Why Is It an Inferior Way

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Essay

What is cost-plus pricing? Why is it an inferior way to make pricing decisions?


Definitions:

Moral Hazard

The risk that one party to a transaction might engage in behavior that is undesirable from the other's standpoint, because the latter cannot effectively control such behavior.

Safer Cars

Vehicles designed with enhanced safety features to protect occupants and reduce the risk of accidents.

Investing

Distributing financial resources with the aim of earning revenue or gains.

Covenants

Agreements or clauses, especially in contracts and property leases, that stipulate actions the parties must perform or avoid.

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