Which of the following statements is most accurate?
A) Nonprofit organizations are exempt from having to cover the costs of producing and/or marketing their products.
B) Socially responsible corporations should have the pricing constraint of covering all costs of producing and marketing their products, but they should not price their products to earn a profit.
C) Regardless of a company's constraints, a firm must cover all the costs of producing and marketing a product, or the firm will fail.
D) Price elasticity of demand makes it virtually impossible for companies to cover all their marketing and production costs at all times.
E) Marketing and production costs are the most difficult and expensive aspect of pricing because they draw so much capital away from other departments in the organization.

Question

Quizplus · Accepted Answer

Regardless of a company's constraints, it must cover all the costs of producing and marketing a product, or the firm will fail. This statement is the most accurate because all companies, regardless of their status as a nonprofit or socially responsible corporation, must cover their costs to stay in business. This includes both production and marketing costs. Nonprofit organizations still have expenses, and socially responsible corporations should price their products to cover expenses and potentially earn a profit to sustain their business in the long term. However, the statement in option B that socially responsible corporations shouldn't price their products to earn a profit isn't accurate, because businesses need profits to survive and grow. Option A is also incorrect because nonprofits still have to cover their costs, even if they don't have to pay taxes. Option D is a subjective statement that isn't necessarily true in all cases. Option E might be true for some companies, but it is not generally true for all organizations.

Which of the Following Statements Is Most Accurate