Question: Clearly price must be based on costs . Using your knowledge of cost, price and demand relationship, explain how the reasoning behind this statement is

Clearly price must be based on costs . Using your knowledge of cost, price and demand relationship, explain how the reasoning behind this statement is circular in that price depends on total cost per unit, but cost per unit depends on volume of sales and volume of sales depends on price. Be sure to explain, in general, what causes cost per unit to go down as volume goes up and volume to go up as price goes down.

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