Which of the Following Is True of the Full-Cost Pricing

question 1

Multiple Choice

Which of the following is true of the full-cost pricing approach?

• A) In this approach, firms regard foreign sales as bonus sales and assume that there will be no return over their variable costs.
• B) In this approach, firms are concerned only with the marginal or incremental cost of producing goods to be sold in overseas markets.
• C) In this approach, prices are often set on a cost-plus basis, that is, total costs plus a profit margin.
• D) This approach is a practical approach to pricing when a company has high fixed costs and unused production capacity.
• E) This approach insists that each unit of a similar product is treated differently in terms of cost.

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Definitions:

Production

The process of creating goods or services by combining various inputs like labor, capital, and natural resources.

Government Subsides

Financial assistance provided by the government to individuals, organizations, or businesses in order to promote certain activities or reduce the costs of those activities.

Economic Growth

An increase in the production of goods and services in an economy over a period, typically measured as the percent change in GDP.

Economic Growth

An increase in the production of goods and services in an economy over a period of time, usually measured by GDP.