Final answer:
The correct answer is option 5.The correct technique for determining product costs by taking into account the expense of production and adding markups is cost-based pricing. Cost analysis involves examining both fixed and variable expenses to make decisions about pricing and production quantities.
Step-by-step explanation:
The technique of determining product costs that involves accounting for the expense of production and typically entails adding markups to calculate selling prices is known as cost-based pricing.
Companies gain insights into how to maximize profits by analyzing their cost structure, differentiating between fixed costs and variable costs, and considering average total cost, average variable cost, and marginal cost. Ultimately, this information helps determine the profit-maximizing quantity and price to charge, although this also requires an understanding of the market structure and how changes in production impact marginal revenue and marginal cost.
Value-based pricing, unlike cost-based pricing, takes into consideration perceived value to the customer, while participative pricing, optimal pricing, and skim pricing are other strategies that are not primarily focused on production costs. The correct answer to the student's question is 5) Cost-based pricing.