A critical assumption when using target profit pricing is that
A)a higher average price will not cause the demand for a product to fall.
B)a higher average price will cause the demand for a product to rise.
C)a higher average price will always cause the demand for a product to fall.
D)this form of pricing is extremely risky because profit is tied to the current value of the dollar.
E)being first is essential if you increase your average price since all of your competitors will do the same.

Question

Quizplus · Accepted Answer

Target profit pricing assumes that a higher average price will not cause the demand for a product to fall. It assumes that consumers are willing to pay a certain price for the product and that price increase will not deter them from purchasing it. This assumption may not always hold true, especially for highly price-sensitive markets.

A Critical Assumption When Using Target Profit Pricing Is That