Even though it often does not result in profit maximization, some small firms use a cost-plus pricing strategy anyway because
A)it is easy to use.
B)they do not understand what marginal revenue and marginal cost mean.
C)it is expensive to hire an economist who can determine what the profit-maximizing price is.
D)they sell several products, each of which sells for a different price. The time and expense involved in finding the profit-maximizing price for each product are not worth the effort.

Question

Quizplus · Accepted Answer

Cost-plus pricing is a simple and straightforward method that involves adding a markup to the cost of producing a product or service. Small firms may not have the resources or expertise to determine the profit-maximizing price using more complex pricing strategies. Therefore, they may choose to use cost-plus pricing, even though it may not result in profit maximization.

Even Though It Often Does Not Result in Profit Maximization