Managers Base Prices on Product Costs Due to Many Reasons

question 34

Multiple Choice

Managers base prices on product costs due to many reasons. Which of the following is not one of the reasons?

• A) Most companies sell many products and services and cost-based pricing provides a simple and direct approach.
• B) Cost-based pricing provides a good starting point for managers.
• C) The cost of a product or service provides a lower limit or floor, below which the price cannot be set in the long run.
• D) Cost-based pricing is useful for standard cost analysis.

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Definitions:

Flexible Exchange Market

A foreign exchange system where the value of currencies are determined by market forces without direct government intervention.

Equilibrium Exchange Rate

The exchange rate at which the demand for a currency equals its supply in the foreign exchange market, resulting in a stable market price.

Euros

The official currency of the Eurozone, which is used by 19 of the 27 European Union countries, known collectively as the Euro area.

Foreign Currencies

The currencies of other countries, used for conducting international transactions or as an investment.