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A practical approach that is frequently used by managers when setting normal long-run prices is
A) the cost-plus approach
B) the economic theory approach
C) the price graph approach
D) price skimming
Economic Theory Approach
A perspective or method that applies economic theories and principles to analyze and solve various problems or to understand behavior.
Price Skimming
Price skimming involves setting a relatively high price for a new product or service at the beginning, then lowering the price over time.
Cost-Plus Approach
A pricing strategy where the selling price of a product is determined by adding a specific markup to its production cost.
- Distinguish among several pricing strategies such as cost-plus pricing, target costing, and pricing based on competition.
- Estimate the impact of different pricing strategies on profit and cost management.
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Learning Objectives
- Distinguish among several pricing strategies such as cost-plus pricing, target costing, and pricing based on competition.
- Estimate the impact of different pricing strategies on profit and cost management.
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