Suppose XYZ Corp.is producing and selling disposable wooden chopsticks in a perfectly competitive market.The market price is $0.04 per unit and the firm is currently producing 1 million units per month.The firm's total revenue is _ _ per month.The firm's marginal revenue is .

Question

Quizplus · Accepted Answer

Total revenue = price x quantity = $0.04 x 1,000,000 = $40,000
Since the firm is operating in a perfectly competitive market, the marginal revenue is equal to the market price, which is $0.04. Therefore, the marginal revenue is $0.04.

The best choice for the firm is to continue producing at their current level since their total revenue is positive and they are operating in the short run. However, in the long run, the firm may want to consider if they can reduce their average total cost to increase their profits.