All of the Following Are Disadvantages of Cost-Plus Pricing Except

question 103

Multiple Choice

All of the following are disadvantages of cost-plus pricing except

• A)It ignores the price elasticity of demand: for example, it may be possible to increase profits by raising or lowering price.
• B)If the industry comprises identical firms (with identical costs), markups could be consistent among firms leading to no one firm having a competitive edge in terms of price.
• C)Allocating and apportioning business overheads to individual products could be somewhat arbitrary.
• D)The business has less incentive to cut or control costs: if costs increase, then selling prices increase. Consequently, this might further erode a firm's competitiveness.

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Definitions:

Speciation Event

The process by which new genetically distinct species evolve from a single ancestral species.

Gene Duplication

A process in which a chromosome segment is copied resulting in multiple copies of the same gene in the genome, often leading to new genetic functions.

Paralogs

Genes that have evolved within the same species due to gene duplication and then diverged in function.

Evo-devo

A branch of biology that studies the evolutionary development processes of organisms, focusing on how genetic changes during development influence evolutionary changes.