The diagram below shows the market demand curve and the cost curves for a single firm.
FIGURE 12- 6
-Refer to Figure 12- 6.Suppose this firm is being regulated using the policy of marginal- cost pricing.The resulting price and output would be

Question

The diagram below shows the market demand curve and the cost curves for a single firm.
  FIGURE 12- 6
-Refer to Figure 12- 6.Suppose this firm is being regulated using the policy of marginal- cost pricing.The resulting price and output would be

Quizplus · Accepted Answer

With marginal-cost pricing, the firm will produce where MC intersects the demand curve, which is point Q2 in this case. The price at this output level is P1, which is equal to the firm's marginal cost at Q2. Therefore, the resulting price and output would be P1 and Q2.

The Diagram Below Shows the Market Demand Curve and the Cost