Which of the Following Is Not a Flaw of Cost-Plus

question 193

Multiple Choice

Which of the following is not a flaw of cost-plus pricing?

• A)Cost-plus pricing is complex to calculate.
• B)Cost-plus pricing implies that the cost of the seller's operational inefficiencies should be borne by the customer.
• C)A markup based on cost does not represent the value to the customer.
• D)The price customers are willing to pay represents the value of the product or service.

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Definitions:

Equilibrium Price

The market price at which the quantity of a good supplied equals the quantity demanded, resulting in market balance.

Surplus Amount

The quantity of a good or service that exceeds what is demanded at a given price.

Producer Surplus

The difference between what producers are willing to receive for a good compared to what they actually receive, essentially the profit.

Price Rises

An increase in the cost of goods or services, often due to factors such as inflation, increased production costs, or higher demand.