A perfectly competitive firm has a random demand with a 20 percent chance of being $10, a 20 percent chance of $16, and a 60 percent chance of being $20. What is the firm's expected marginal revenue?

Question

Quizplus · Accepted Answer

The expected marginal revenue is calculated by multiplying each possible demand value by its probability and summing the results: (0.2 * $10) + (0.2 * $16) + (0.6 * $20) = $2 + $3.2 + $12 = $17.20.

A Perfectly Competitive Firm Has a Random Demand with a 20