All of the following are disadvantages of cost-plus pricing except
A) Allocating and apportioning business overheads to individual products could be somewhat arbitrary.
B) If the industry comprises identical firms (with identical costs), markups could be consistent among firms leading to no one firm having a competitive edge in terms of price.
C) It ignores the price elasticity of demand: for example, it may be possible to increase profits by raising or lowering price.
D) The business has less incentive to cut or control costs: if costs increase, then selling prices increase. Consequently, this might further erode a firm's competitiveness.
B
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To serve the public interest, government sometimes promotes competition by breaking up natural monopolies
a. True b. False
Which is not a determinant of supply?
a. The existing state of technology used by the firm b. The level of government taxes and subsidies c. The cost of resources used in production d. The market price of the good
In the early 2000s, Chinese officials indicted members of a forgery syndicate that sold several hundred diplomas to high school graduates who needed the diplomas to take employment tests. This situation, where having the certificate of knowledge is more important than the knowledge itself, is known as:
A. the brain drain. B. human capital. C. certification. D. credentialism.
"As the price of personal computers continues to fall, demand increases." This headline is inaccurate because:
A. a change in the price of personal computers shifts the supply curve. B. a falling price of personal computers increases the quantity demanded, not demand. C. the statement is backwards: increased demand leads to lower prices. D. a change in the price of personal computers shifts the demand curve.