Does marginal cost pricing
Free to vary from average cost
Conflict
with classical
average cost plus pricing
Of course it does
With increasing unit productivity
And falling unit cost
A capitalist firm
is constrained by break even prices
Or it bleeds red ink unto death
On the other hand
Demand constrained markets
By definition
Are pricing above marginal unit cost
If the goal is simple operating profit max
Marginal Unit COST
c (q) = FC /Q + vc (Q)
q = marginal unit sold
Q = total units sold
FC = fixed costs
c(q)< price
