A yo-yo manufacturer is producing 5,000 yo-yos selling them for $1.50 each.At this level of output,marginal revenue is $1.50.From this information,we can conclude that the yo-yo manufacturer

Question

Quizplus · Accepted Answer

The fact that the marginal revenue is equal to the price ($1.50) indicates that the yo-yo manufacturer is not able to influence the market price and is taking the price as given. This is a characteristic of a competitive firm (price taker) rather than a monopolistic firm (which would have some degree of market power and be able to charge a higher price). The lack of market power also suggests that the demand curve is relatively elastic, further supporting the conclusion that the firm is a price taker.

A Yo-Yo Manufacturer Is Producing 5,000 Yo-Yos Selling Them for $1.50