All of the following are disadvantages of cost -plus pricing except
A) It ignores the price elasticity of demand: for example, it may be possible to increase profits by raising or lowering price.
B) If the industry comprises identical firms (with identical costs), markups could be consistent among firms leading to no one firm having a competitive edge in terms of price.
C) Allocating and apportioning business overheads to individual products could be somewhat arbitrary.
D) The business has less incentive to cut or control costs: if costs increase, then selling prices increase. Consequently, this might further erode a firm's competitiveness.

Question

Quizplus · Accepted Answer

B) is not a disadvantage of cost-plus pricing. It suggests a scenario where cost-plus pricing could lead to uniform pricing among identical firms, which is not inherently a disadvantage of the pricing strategy itself.

All of the Following Are Disadvantages of Cost -Plus Pricing