When companies do NOT want to use market prices or find it too costly, they typically use ________ prices, even though suboptimal decisions may occur.
A)average-cost
B)full-cost
C)long-run cost
D)short-run average cost

Question

Quizplus · Accepted Answer

Full-cost pricing involves considering both fixed and variable costs when setting the price of a product or service. This approach can be helpful for companies that want to ensure they cover all of their costs and make a profit. While market prices may be more accurate, they can also be difficult to obtain or use, especially for companies that operate in niche markets or have unique products or services. Full-cost pricing can also help companies avoid underpricing their products or services, which can lead to losses or financial instability. While suboptimal decisions may occur with full-cost pricing, it can be a reasonable approach for companies that want to simplify pricing and ensure they are covering all costs.

When Companies Do NOT Want to Use Market Prices or Find