The excess of price over marginal cost is not the best measure of profit per unit because:
A)marginal cost is not always equal to average cost.
B)it shows the accounting profit of a firm and not the economic profit.
C)it does not take into account the variable costs of the firm.
D)profitable firms produce at a level where price is less than marginal cost.

Question

Quizplus · Accepted Answer

The excess of price over marginal cost is not the best measure of profit per unit because marginal cost is not always equal to average cost, which means it doesn't account for total costs including fixed costs.

The Excess of Price Over Marginal Cost Is Not the Best