Steve,the sales manager for TL Products,wants to sponsor a one-week "Customer Appreciation Sale" where the firm offers to sell additional units of a product at the lowest price possible without negatively affecting the firm's profits.Which one of the following represents the price that should be charged for the additional units during this sale?
A)average variable cost
B)average total cost
C)average total revenue
D)marginal revenue
E)marginal cost

Question

Quizplus · Accepted Answer

To determine the lowest price possible without negatively affecting profits, we need to consider the additional cost of producing those units, which is represented by marginal cost. Therefore, the price charged for the additional units during the sale should be equal to or slightly above the marginal cost. Choosing any of the other options would not take into account the additional cost of producing those units, and may negatively affect the firm's profits.

Steve,the Sales Manager for TL Products,wants to Sponsor a One-Week