Question

Marginal cost pricing rule is a rule that sets price​ _____ marginal cost to achieve​ _____ output.

Answer 1

Answer:

1) Equal to

2) Efficient

3) Equal to

4) Total

Explanation:

1) Marginal cost pricing is when you price the good equal to the extra cost of producing an extra good, so for example if I am a shoe manufacturer and the cost of producing an extra pair of shoe is $4 and I price the pair of shoe at $4 I am using marginal cost pricing.

2) When the producer is using marginal cost pricing the output produced is efficient as there is no dead weight loss and efficient level of output is produced.

3,4) If I produce 10 pairs of shoes and they cost me $500 then my average total cost for the pair of shoes is 500/10 = $50 and if I keep the price of the shoe at $50 I am using average cost pricing, so average cost pricing is keeping price equal to the average total cost.