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| Topic: |
Business
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| Number of pages / Number of words: |
8 / 2182 |
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After determining the optimum output by equating marginal revenue versus marginal cost, PNM can then base their price on the elastic region of their demand curve. The choices open to PNM is either to charge a socially optimal price (P=MC), a fair-return price (P=ATC) or a monopoly price which is greater than average total cost (P>ATC)...
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On the other hand, if a monopoly price is charged then the company is faced with productive and allocation inefficiencies.
To counter, a non-pricing strategy would be the years of research and advancements in technology that has brought about economies of scale which PNM boasts, and strategically utilize to block any potential competition...
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