Whether the firm uses the market-based approach or the cost-based approach for pricing decisions, the market forces must be considered.

Question

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Regardless of whether a firm uses the market-based approach or the cost-based approach for pricing decisions, the market forces such as competition, consumer demand, and supply must be taken into account. Ignoring market forces can lead to pricing decisions that are uncompetitive or unsustainable in the long run.

Whether the Firm Uses the Market-Based Approach or the Cost-Based