Marginal cost pricing is a system of pricing in which the price charged equals the marginal cost of:
A) the last unit produced and the firm earns zero profit.
B) each unit produced and the firm earns zero profit.
C) the last unit produced and the firm suffers a loss unless the government gives the firm a subsidy.
D) the profit-maximization unit and the firm earns an economic profit.

Question

Quizplus · Accepted Answer

Marginal cost pricing involves setting the price of a product equal to the marginal cost of producing the last unit. This often results in the firm not covering its total costs (including fixed costs), leading to a loss unless compensated, for example, by a government subsidy.

Marginal Cost Pricing Is a System of Pricing in Which