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Politics : View from the Center and Left
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To: Cogito who wrote (70498)6/3/2008 5:26:47 PM
From: Bearcatbob  Read Replies (2) of 542688
 
Marginal cost pricing is the principle that the market will,

(http://www.answers.com/topic/marginal-costs?cat=biz-fin)

over time, cause goods to be sold at their marginal cost of production. Whether goods are in fact sold at their marginal cost will depend on competition and other factors, as well as the time frame considered. In the most general criticism of the theory of marginal cost pricing, economists note that monopoly power may allow a producer to maintain prices above the marginal cost; more specifically, if a good has low elasticity of demand (consumers are insensitive to changes in price) and supply of the product is limited (or can be limited), prices may be considerably higher than marginal cost. ..............................
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