Average-cost pricing
A)will result in losses if actual sales are much higher than expected.
B)might cause a firm to charge too high or too low a price-and reduce its profits.
C)usually assumes the firm will sell a larger quantity than the year before.
D)cannot be profitable,because it ignores demand.
E)All these answers are correct.

Question

Quizplus · Accepted Answer

Average-cost pricing works well if the firm actually sells the quantity it used to set the average-cost price.Losses may result,however,if actual sales are much lower than expected.If sales are much higher than expected,then profits may be very good.But this will only happen by luck,because the firm's demand is much larger than expected.

Average-Cost Pricing