--%>

Illustrates the role of cost in pricing

Illustrates the role of cost in pricing?

E

Expert

Verified

Mainly of the wholesale and retail organizations add several percentage of profit or mark up total cost per unit to attain at selling price. In words of Hall and Hitch, business firms under the conditions of monopolistic competitive and oligopoly market do not find out price and output with the assist of the principle MC=MR. They find out price and output on the basis of full average cost of production. Cost of production comprises fixed and variable costs. Under the short run the firm may not cover the fixed cost but this should cover at least variable cost. Under long run all costs should be covered.

If the whole cost is not recovered, the firm will acquire losses, and the firm should stop their production. Therefore costs provide the basis for pricing. When the cost raises price also increases. Cost shows a resistance point for lowering of price that is below that pricing should not be completed. Cost also find out the profit margin at different level of output.

   Related Questions in Managerial Economics

  • Q : Derived Demand for Labor All else

    All else identical, a competitive firm will demand more labor when: (w) technological advances lead to automation. (x) the price of the firm’s output rises. (y) more firms enter the industry. (z) competing firms offer their workers more training

  • Q : Wage Rates and Employment An increase

    An increase in the competitively-set wage tends to cause: (w) firms to reduce the amounts of labor hired. (x) increases in the marginal revenue products of the workers a firm retains. (y) higher marginal factor costs of labor to competitive firms. (z)

  • Q : Explain the external economies of scale

    Explain the external economies of scale.

  • Q : Labor and Revenue in Purely Competitive

    Short run total revenue of the purely competitive firm would be at a maximum along with: (1) 600 workers. (2) 700 workers. (3) 800 workers. (4) 900 workers (5) 1000 workers.

    Q : Labor Productivity Where diminishing

    Where diminishing returns overwhelm gains through the division of specialized labor, when there is an inflection point on the total revenue curve derived by a total output curve, and by the vantage point of a purely competitive firm h

  • Q : Define the term unitary elastic Define

    Define the term unitary elastic.

  • Q : Illustrates the types of revenue cost

    Illustrates the types of revenue?

  • Q : Supply of Labor The firm in this

    The firm in this illustrated graph is clearly: (1) price taker in the sale of its output because of the shapes of the VMP and MRP curves. (2) price taker in the purchase of labor when this can hire as several workers as this chooses at roughly of $13 per hour. (3) mon

  • Q : Advantages and disadvantages of Trend

    What are the advantages and disadvantages of trend projection method?

  • Q : Negatively sloped over wage ranges The

    The supply curve of the labor is negatively sloped over wage ranges where the: (1) the demand for leisure rises along with income. (2) leisure is an inferior good. (3) people offer more hours of labor at higher wages. (4) some people