Under Traditional concept firms follow------------------- method of pricing-
Answers
Explanation:
Cost-Based Pricing
Cost-based pricing involves calculating the cost of the product, and then adding a percentage mark-up to determine price.
LEARNING OBJECTIVES
Analyze the use of cost-plus pricing as a pricing method
KEY TAKEAWAYS
Key Points
Cost based pricing is the easiest way to calculate what a product should be priced at. This appears in two forms: full cost pricing and direct-cost pricing. Full cost pricing takes into consideration both variable, fixed costs and a % markup. Direct-cost pricing is variable costs plus a % markup.
Cost-plus pricing is a pricing method used by companies to maximize their profits. The firms accomplish their objective of profit maximization by increasing their production until marginal revenue equals marginal cost, and then charging a price which is determined by the demand curve.
Cost-plus pricing is used primarily because it is easy to calculate and requires little information.