Which of the following is not an advantage of cost-plus pricing?
A)It leads to profit maximization.
B)It is an easy method to implement if a firm produces multiple products and has overhead costs that are difficult to allocate to a particular good.
C)It could lead to price stability if the industry is made up of identical firms all using the same method of pricing.
D)It is easy to justify price increases when total costs of production increase.

Question

Quizplus · Accepted Answer

Cost-plus pricing may not necessarily lead to profit maximization as it does not take into account demand and competition. It only ensures that the firm covers its costs and adds a markup to it.

Which of the Following Is Not an Advantage of Cost-Plus