Marginal cost pricing means that a firm
A)Produces up to the output where P = MC for a given market price.
B)Lowers market price to marginal cost for a given output.
C)Lets marginal cost rise to the market price for a given output.
D)Produces up to the output level at which MC = 0 for a given market price.

Question

Quizplus · Accepted Answer

Marginal cost pricing means that a firm produces up to the output where P (market price) = MC (marginal cost) for a given market price. In other words, the firm sets its price equal to its marginal cost, which is the cost of producing one additional unit of output. This is considered an efficient pricing strategy as the firm is minimizing its costs and producing at the point where there is no excess profit to be made.

Marginal Cost Pricing Means That a Firm