Which of the following pricing strategies allows a firm to earn economic profit?
A)Price discrimination
B)Charging a price equal to marginal cost
C)Charging a price equal to the average total cost of production
D)Charging a price equal to the average variable cost of production

Question

Quizplus · Accepted Answer

Price discrimination allows a firm to charge different prices to different groups of customers based on their willingness to pay. This strategy can increase a firm's economic profit by capturing more consumer surplus and maximizing revenue. Charging a price equal to marginal cost, average total cost of production, or average variable cost of production may not necessarily lead to economic profit.

Which of the Following Pricing Strategies Allows a Firm to Earn