Cost-Price Pricing Typically Does Not Result in Profit-Maximization

question 26

Multiple Choice

Cost-price pricing typically does not result in profit-maximization. As a result, economists have two views of cost-plus pricing. One of these views is

• A) cost-plus pricing is more likely to lead to profit-maximization for large firms than for small firms.
• B) cost-plus pricing is a good way to approximate the profit-maximizing price when marginal revenue or marginal cost is difficult to determine.
• C) cost-plus pricing is more likely to lead to profit-maximization for monopolistically competitive firms than for oligopoly firms.
• D) cost-plus pricing is more likely to result in profit-maximization the more elastic the firm's demand curve is.

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Definitions:

IR Absorption

The process where molecules absorb infrared light at specific frequencies, causing vibrational changes, used in spectroscopy for substance identification.

Carbonyl Stretch

Refers to the vibration of the carbon-oxygen double bond in the infrared spectroscopy region, often used to identify carbonyl-containing functional groups in organic compounds.

Characteristic Stretches

Specific vibrational movements observed in infrared spectroscopy, unique to various functional groups in a molecule.

Stretching Frequency

A term used in vibrational spectroscopy to describe the rate at which a bond between atoms vibrates, often measured in wave numbers (cm^-1).