Management wants to offer a "Thank You" sale to its customers by offering to sell additional units of a product at the lowest price possible without affecting their proﬁts. The price management charges
For these one-time sale units should be set equal to the:
A) Average variable cost.
B) Average total cost.
C) Average total revenue.
D) Marginal revenue.
E) Marginal cost.

Question

Quizplus · Accepted Answer

Setting the price equal to marginal cost ensures that the company is covering all its variable costs and is not losing money on the sale of additional units. This also allows the company to generate additional revenue and potentially attract new customers without affecting their overall profits. The other options (average variable cost, average total cost, average total revenue, and marginal revenue) do not consider all the costs associated with producing the additional units and may lead to losses for the company.

Management Wants to Offer a "Thank You" Sale to Its