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One reason break-even pricing would actually be useful to a business would be... If a business...

One reason break-even pricing would actually be useful to a business would be...

If a business wanted to try selling a new product and wanted to figure what attributes people really care about in order to break even.

If a business wanted to try selling a new product but wanted to do a quick analysis to see if the price to break-even would even be reasonable.

If a business wanted to figure out the price of a new product based on the their own costs and a pre-established markup percentage.

If a business wanted to try selling a new product and wanted to figure out the part worths of each attribute on the product in order to break even.

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Answer #1

Option 3 is true

The break even pricing will cover the fixed and variable cost per unit. It will also cover the profit per unit required by the business.

1: Break even pricing will not help in understanding the attributes required.

2: It will not allow the business to understand the reasonable price. It will only allow the business to understand the price at which costs can be recovered.

4: The part worths of the attribute cannot be ascertained by this method.

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