Marginal cost pricing means that
A)Goods are offered for sale at prices equal to average total cost.
B)Firms produce where marginal cost equals marginal revenue.
C)Firms produce where marginal cost equals zero.
D)Goods are offered for sale at prices equal to marginal cost.

Question

Quizplus · Accepted Answer

Marginal cost pricing means that goods are offered for sale at prices equal to marginal cost. This is because at the point where marginal cost equals marginal revenue, the producer is able to produce and sell one more unit of a good without incurring any further costs, maximizing profits. Therefore, in order to sell more goods at the point where marginal cost equals marginal revenue, the producer must sell the goods at the marginal cost.

Marginal Cost Pricing Means That