A Disadvantage of Average-Cost Pricing Is That It

question 238

Multiple Choice

A disadvantage of average-cost pricing is that it

• A) does not consider historical values.
• B) is a highly complicated method of pricing.
• C) is rarely a useful input to pricing decisions.
• D) is easy to lose money with average-cost pricing.
• E) does not help understand how costs operate at different levels of output.

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Definitions:

Barrier To Entry

Factors that prevent or hinder new competitors from easily entering an industry or area of business.

Advertising

The task or career of generating marketing materials for business products or offerings.

Marginal Cost

The additional cost incurred to produce one more unit of a good or service, critical for decisions on production levels.

Marginal Revenue

The additional income that is generated by selling one more unit of a good or service.