(solution) Which of the following explains why firms may incur losses

(solution) Which of the following explains why firms may incur losses

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.