Which of the Following Is True of Full-Cost Pricing

question 18

Multiple Choice

Which of the following is true of full-cost pricing?

• A) Full-cost pricing uses the marginal cost of a product as its base.
• B) Since fixed costs do not affect optimal price and quantity, full-cost pricing is error-prone.
• C) Firms that use full-cost pricing are producing at the optimum level of output.
• D) Full-cost pricing is based on the markup of price over average variable cost.
• E) Full-cost pricing takes into account the price elasticity of demand for the product.

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Definitions:

Fair-Minded

Characterized by impartiality and honesty; free from self-interest, prejudice, or favoritism.

Trustworthy

Deserving of trust or confidence, reliable and dependable in character, actions, and intentions.

Equity

The concept of fairness or justice in situations, ensuring fair treatment and distribution of resources among individuals or groups.

Social Exchange

A theory that suggests human relationships are formed by the use of a subjective cost-benefit analysis and the comparison of alternatives.