“Marginal cost pricing, as well as the use of incremental analysis, is looked upon with favor by economists, especially those on the staffs of regulatory agencies. With this encouragement, regulated industries do indeed employ these rational techniques quite frequently. Unregulated firms, on the other hand, use marginal or incremental cost pricing much less frequently, sticking to cost-plus, or full-cost, pricing except under unusual circumstances. In my opinion, this goes a long way toward explaining the problems of the regulated firms vis-à-vis unregulated industry.” Discuss this statement.
Answer to relevant QuestionsWhat is price discrimination?TLC Lawn care, Inc., provides fertilizer and weed control lawn services to residential customers. Its seasonal service package, regularly priced at $250, includes several chemical spray treatments. As part of an effort to ...The General Eclectic Company manufactures an electric toaster. Sales of the toaster have increased steadily during the previous five years, and, because of a recently completed expansion program, annual capacity is now ...The standard deviation measure of risk implicitly gives equal weight to variations on both sides of the expected value. Can you see any potential limitations of this treatment?The certainty equivalent concept can be widely employed in the analysis of personal and business decision making. Indicate whether each of the following statements is true or false and explain why:A. The appropriate ...
Post your question