A Critical Assumption When Using Target Profit Pricing Is That

question 64

Multiple Choice

A critical assumption when using target profit pricing is that

• A) a higher average price will not cause the demand for a product to fall.
• B) new technology will cause the demand for a product to rise.
• C) a higher average price will deter moves by competitors.
• D) this form of pricing is extremely risky because profit is tied to the current value of the dollar.
• E) competitors will not copy any pricing changes.

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Definitions:

Comparative Advantage

The ability of a country or entity to produce a particular good or service at a lower opportunity cost than others, leading to more efficient international trade.

World Output

The total value of goods and services produced across the globe within a specific time frame, often used to measure the economic performance of the global economy.

Self-Sufficient

Refers to an individual, household, or community that has the capacity to fulfill all its needs without external assistance.

Resource Endowments

Resource endowments refer to the natural resources a country has available for use and trade, influencing its economic structure and development potential.