What is meant by the term fair-return price?
A)The price which ensures that the firm is able to make normal profits only.
B)The price which ensures that the firm is able to make economic profits only.
C)The price which ensures that the output will be produced at the lowest possible cost.
D)The price which ensures the best allocation of products.
E)A price equal to marginal cost.

Question

Quizplus · Accepted Answer

The fair-return price is the price which ensures that the firm is able to make normal profits only, i.e., it covers all the explicit and implicit costs involved in the production and also provides a reasonable return to the owners. It is not as high as the monopoly price or as low as the competitive price, rather it is somewhere in between.

What Is Meant by the Term Fair-Return Price