Which of the following explains why firms may incur losses with average-cost pricing?
1.The average-cost price is always set such that the number of products sold is higher than expected.2.The average-cost approach doesn’t consider how costs change as output changes.3.The total number of units that are manufactured is a poor indicator of a firm’s average cost.4.The average-cost pricing model requires high levels of expenditure on market demand forecasting.5.In most cases, the average cost of two different products is never the same.
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