Marginal Cost Pricing is an economic concept where the price of a good or service is set equal to the additional cost of producing one more unit. This approach helps ensure that resources are allocated efficiently, as it reflects the true cost of production. By pricing goods at their marginal cost, businesses can encourage consumption and maximize social welfare. This pricing strategy is often used in industries with high fixed costs and low variable costs, such as utilities or public transportation. It allows these services to be affordable for consumers while covering the costs of production, ultimately benefiting both providers and users.