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

The price that should be charged for the additional units during the sale should be equal to the marginal cost, which is the cost of producing one additional unit. This is because the firm wants to sell as many units as possible without negatively affecting profits, so charging at least the marginal cost will ensure that the firm is not losing money on each additional unit sold.

Steve, the Sales Manager for TL Products, Wants to Sponsor