Which firm in Figure 26.5 is using marginal cost pricing?
A) Firms B and D only.
B) Firm B only.
C) Firm C only.
D) All of the firms are using marginal cost pricing.

Question

Which firm in Figure 26.5 is using marginal cost pricing?
A) Firms B and D only. 
B) Firm B only. 
C) Firm C only. 
D) All of the firms are using marginal cost pricing.

Quizplus · Accepted Answer

Marginal cost pricing is when a firm sets the price equal to the marginal cost to produce one additional unit of output. In Figure 26.5, firm B is the only one that sets its price at the level of marginal cost. Firms A and E have higher prices, while firms C and D have lower prices.

Which Firm in Figure 26