Apple is likely to charge a price above marginal cost for the iPhone.

Question

Quizplus · Accepted Answer

Apple is a profit-maximizing firm and as per economic theory, firms charge a price above their marginal cost to earn profits. Apple incurs various costs such as research and development, marketing, and manufacturing costs apart from the raw material cost of producing the iPhone. Therefore, to earn profits, Apple will charge a price above the marginal cost of producing each unit of the iPhone.

Apple Is Likely to Charge a Price Above Marginal Cost