Even Though It Often Does Not Result in Profit Maximization

question 247

Multiple Choice

Even though it often does not result in profit maximization, some small firms use a cost-plus pricing strategy anyway because

• A)it is easy to use.
• B)they do not understand what marginal revenue and marginal cost mean.
• C)it is expensive to hire an economist who can determine what the profit-maximizing price is.
• D)they sell several products, each of which sells for a different price. The time and expense involved in finding the profit-maximizing price for each product are not worth the effort.