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REGULATORY PRICING: Government control over the price charge in a market, especially by a firm with market control. Price regulation is most commonly used for public utilities characterized as natural monopolies. If allowed to maximize profit without restraint, the price charged would exceed marginal cost and production would be inefficient. However, because such firms, as public utilities, produce output that is deemed essential or critical for the public, government steps in to regulate or control the price. The two most common methods of price regulation are marginal-cost pricing and average-cost pricing.
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MARGINAL COST The change in total cost (or total variable cost) resulting from a change in the quantity of output produced by a firm in the short run. Marginal cost (MC) indicates how much total cost changes for a given change in the quantity of output. Because changes in total cost are matched by changes in total variable cost in the short run (total fixed cost is fixed), marginal cost is the change in either total cost or total variable cost. It is found by dividing the change in total cost (or total variable cost) by the change in output. Marginal cost is one of four cost concepts used in short-run production analysis. The other three are average total cost, average fixed cost, and average variable cost.
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BLACK DISMALAPOD
[What's This?]
Today, you are likely to spend a great deal of time at the confiscated property police auction trying to buy either a rechargeable battery for your cell phone or a T-shirt commemorating the 2000 Olympics. Be on the lookout for the last item on a shelf.
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Two and a half gallons of oil are needed to produce one automobile tire.
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"Life is not a 'brief candle.' It is a splendid torch that I want to make burn as brightly as possible before handing it on to future generations. " -- Bernard Shaw, journalist
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AFEA
American Farm Economic Association
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