The short-run differential costs of a product are $25.Fixed costs are $5 per unit based on 10,000 units produced during this period.The company has adequate capacity to accept a special order of 1,000 units.What is the minimum price that could be charged using the differential approach to pricing?
A)$ 5.00
B)$20.00
C)$25.00
D)$30.00

Question

Quizplus · Accepted Answer

The minimum price using the differential approach to pricing would be the short-run differential costs, which are $25. Fixed costs are irrelevant in this context because they do not change with the production of additional units in the short run.

The Short-Run Differential Costs of a Product Are $25