A firm's markup
A) Is the amount by which its price exceeds its marginal cost, expressed as a percentage of its price
B) Is the amount by which its marginal cost exceeds its average cost
C) Is the amount by which its average cost exceeds its marginal cost
D) Is the value of its profit

Question

Quizplus · Accepted Answer

A firm's markup is the amount by which its price exceeds its marginal cost, expressed as a percentage of its price. It is a measure of the firm's pricing power and ability to generate profit. A high markup means the firm is charging a high price relative to its cost, while a low markup indicates the firm has little pricing power.

A Firm's Markup