Which of the Following Pricing Strategies Allows a Firm to Earn

question 53

Multiple Choice

Which of the following pricing strategies allows a firm to earn economic profit?

• A)Price discrimination
• B)Charging a price equal to marginal cost
• C)Charging a price equal to the average total cost of production
• D)Charging a price equal to the average variable cost of production

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Definitions:

Common Fixed Expenses

Regular, unchanged expenses that a business incurs, regardless of the level of production or sales volume.

Break-even

The point at which total costs and total revenue are equal, indicating that a business makes neither a profit nor a loss.

Sales Dollars

The total revenue generated from goods or services sold by a company, measured in dollar terms.

Common Fixed Expenses

Expenses that remain constant for a business across different projects, products, or divisions and do not change with the level of production or sales.