-Marginal-Cost Pricing Is Achieved When the Production of a Good

question 57

Multiple Choice

-Marginal-cost pricing is achieved when the production of a good occurs at that point where:

• A)the price that consumers are willing to pay equals minimum AC
• B)the price that consumers are willing to pay equals MC
• C)P = minimum AVC
• D)total revenue is equal to FC
• E)P = minimum MC

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Definitions:

Consumer Surplus

The distinction between the aggregate amount consumers are inclined and capable of paying for a service or product and what they actually disburse.

Minimum Imposed Price

A price floor set by the government or a regulatory body, below which the price of a good or service cannot fall.

Producer Surplus

The difference between the amount producers are willing and able to supply a good for and the actual amount received by them when the good is sold.

Consumer Surplus

The variance between the price consumers are ready to offer for a good or service and the price they actually incur.