The Firm Is in a Decreasing Cost Industry,and Its Prices

question 8

Multiple Choice

The firm is in a decreasing cost industry,and its prices are based upon strict marginal costs.The firm experiences a loss.In this case,for the firm to recover its fixed costs,it must use marginal cost as a floor for its prices,and:

• A) try to take business away from competing modes and carriers.
• B) convince its customers to pay more for the services offered.
• C) use the value of service to determine how high above marginal cost the price should be set.
• D) ask the government to intervene so they can raise the minimum cost level.

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