Which of the following best describes the impact of undercosting in the allocation of production costs?
A. Companies will use target pricing to undercost products.
B. Undercosting some products can lead to overcosting other products, which is acceptable because it all balances out in the long run.
C. Undercosting some products will lead to overcosting other products, which may then become overpriced and lose market share.
D. This is a goal of all companies because undercosting all products allows for larger profit margins.
Answer: C
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