is the critical assumption when using target profit pricing?
A) a higher average price will usually cause the demand to fall
B) a higher average price will always cause the demand to fall
C) profit is relative to the current value of the dollar so this form of pricing is extremely risky
D) a higher average price will not cause the demand to fall
E) if the average price is increased, all of a firm's competitors will do the same

Question

Quizplus · Accepted Answer

The critical assumption when using target profit pricing is that a higher average price will not cause the demand to fall. This is because the target profit is calculated based on the assumption that increasing the price will result in additional revenue that offsets any potential loss in demand.

Is the Critical Assumption When Using Target Profit Pricing