Which of the following is true about production cost as a pricing constraint?
A)In the short run, a firm's price must cover all the costs of producing a product.
B)Covering the firm's costs doesn't affect pricing the product at all.
C)In the long run, a firm's costs set a floor under its price.
D)In the long run, a firm's costs set a ceiling over its price.

Question

Quizplus · Accepted Answer

In the long run, a firm's price must cover all the costs of producing and marketing a product.If the price doesn't cover these costs, the firm will fail; so in the long run, a firm's costs set a floor under its price.

Which of the Following Is True About Production Cost as a Pricing