The major weakness of "average-cost pricing" is that:
A) it ignores likely customer demand at different prices.
B) it usually leads to losses instead of profits.
C) it always results in a profit that is less than expected.
D) it is too hard for most managers to use.
E) All of these are major weaknesses of "average-cost pricing."

Question

Quizplus · Accepted Answer

Average-cost pricing only considers the production cost and ignores market demand, which can result in setting prices that are either too high, leading to lower sales, or too low, leading to lower profits. The other options are not necessarily true.

The Major Weakness of "Average-Cost Pricing" Is That