31. However, it makes classic marginal cost pricing completely infeasible. 32. Each firm will produce where P = marginal costs and there will be zero profits. 33. For example, you see market segmentation in car pricing where marginal cost is not zero. 34. The important conclusion is that marginal cost " is not related to " fixed costs. 35. The downside is heavy production costs, which raise the marginal cost of every new subscription gained. 36. In a perfectly competitive market, supply and demand equate marginal cost and marginal utility at equilibrium. 37. Market price is determined jointly by the marginal cost of production * and * the demand. 38. It would be irrational to price below marginal cost , because the firm would make a loss. 39. Therefore, marginal cost is simply the wage rate w divided by the marginal product of labor 40. By some estimates, the marginal costs for clearing a smart-card transaction are well under a penny.
