Firms have several different concepts of revenue: total revenue,average revenue,marginal revenue,and price.For a profit- maximizing perfectly competitive firm,which statement below is true?

Question

Quizplus · Accepted Answer

In a perfectly competitive market, a firm is a price taker and must accept the market price as given. Therefore, the firm can sell all its output at the same price, which means that the price is equal to both average revenue and marginal revenue. Additionally, total revenue is simply the product of price and quantity, so it will be greater than both average revenue and marginal revenue. Therefore, only statement A is true: average revenue, marginal revenue, and price are all equal for a profit-maximizing perfectly competitive firm.

Firms Have Several Different Concepts of Revenue: Total Revenue,average Revenue,marginal