Marginal Cost Pricing

Hey Guys, A quick question, If the firm decides to implement a marginal cost pricing strategy will the firm still make a accounting or economic profit? Thanks

sorry buddy but I think u need to go back to the basics and figure out for urself that u r talking about 2 very different things

Ok, let me simplfy it…when a firm implements a MCP strategy, will the firm make a profit?

If a firm has an upward sloping supply curve (i.e increasing marginal costs) and sets a price equal to the marginal cost of its last unit produced, the firm will breakeven on the last unit and earn an operating profit on all other units.

Merci!!!

reread the section in schweser…talks about it pretty clearly

Yeah, i still need to purchase a study guide.

I hope your question is related to pricing strategies in case of natural monopolies. And if it is then, it will require govt subsidy to make normal profits. And I think its more of a regulation rather than “firm decides to apply MCP”…

Also, Reineir, the correct response to D’Artagnan’s first comment would have been: I’m not your buddy, friend.

cjones65 Wrote: ------------------------------------------------------- > Also, Reineir, the correct response to > D’Artagnan’s first comment would have been: I’m > not your buddy, friend. wow that’s a nice start cjones … for sure we r not buddies … anyway I hope reineir got my point, gamblingeconomist explained well the concept