Answer (D) is correct . Product pricing is a function of consumer demand, competitive factors, and the seller’s cost structure and profit objectives. Thus, the seller must consider the trade-off between the price and quality effects on demand. A better-quality product, for example, one with a relatively long useful life, is more costly to produce and therefore sells for a higher price, which in turn reduces the amount demanded.
Answer (A) is incorrect because The customers’ preference is also important when determining the price of a product.
Answer (B) is incorrect because The life of the product should also be considered when pricing a product.
Answer (C) is incorrect because The quality of a product is important when determining how much to charge for it.
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