Critique of a Pricing Strategy
A start-up company plans to manufacture a new product. Their projected cost function is C(Q) = $2,000,000 + $150Q, where Q is the number of units produced. The company's CEO makes the following statement: 'To be profitable, we simply need to sell our product for any price above our $150 per-unit cost.' Critically evaluate the CEO's statement. Is this pricing strategy a guaranteed path to profitability? Explain your reasoning by analyzing both components of the given cost function.
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