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marginal-cost pricing |
Also found in: Dictionary/thesaurus, Medical, Financial, Acronyms, Wikipedia, Hutchinson | 0.07 sec. |
marginal-cost pricingIn economics, the practice of setting a product's price equal to the additional (marginal) cost of producing one more unit of output. The producer charges an amount equal to the cost of the additional economic resources. The policy is used to maintain a low selling price or to keep a business operating during a period of poor sales. Because fixed costs such as rent and building maintenance must be paid whether a company produces or not, a firm experiencing temporary difficulties may decide to remain in production and sell the product at marginal cost, since its losses will be no greater than if it ceased production. How to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit webmaster's page for free fun content. |
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| That makes the marginal cost for each additional kid $109,000 a year. In addition, while the market-determined product price equals marginal cost at the profit-maximizing quantity of output for a ppt, the market-determined wage equals marginal revenue product at the profit-maximizing amount of labor for a rpt, with the logic of marginal reasoning behind these results quite similar for either decision. The accountant will argue that the suppler B should be the supplier of choice; but if the extra 1000 tons of paper made with supplier A is calculated at marginal cost, suddenly the picture changes. |
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