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Sir although I have watched the lecture of transfer pricing, but I could not understand that why $20 is called as marginal cost and why $22 is called as net marginal revenue. Please explain this
Are you watching the lectures in chapter order, because I remind what marginal cost is in the earlier chapters (the term is revision from Paper F2)?
The marginal cost is the extra cost of producing 1 more unit.
Net marginal revenue is a term only used in transfer pricing. It is, as I explain the lecture, the extra revenue earned from 1 more unit less the extra costs of producing 1 more unit.
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