Markup is the amount by which price exceeds marginal cost. It represents the additional amount that a firm is charging above the cost of producing an additional unit of output. It is not the firm's total profit or total cost, and it is not related to average variable cost or the difference between price and marginal cost.

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A Firm's Markup Is

Question 68

Multiple Choice

A firm's markup is

A) the firm's total profit.
B) the firm's total cost.
C) the amount by which price exceeds marginal cost.
D) the amount by which price exceeds average variable cost.
E) the amount by which price is less than marginal cost.

Correct Answer: