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"Cost-Plus-Markup" Pricing

Question 37

Multiple Choice

"Cost-Plus-Markup" pricing:


A) refers to the practice of some businesses of setting prices for their products by adding some percentage markup to an estimate of their marginal cost.
B) is used by firms because they are unable to make reliable estimates of their rivals' sales.
C) refers to the fact that businesses make profits only when prices are higher than average costs.
D) is the name that businesses give to what the economist calls "maximizing profits through equating marginal cost and marginal revenue."
E) is adopted, in part, because of the difficulty of estimating marginal revenue and marginal cost.

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