Xavier produces and sells tomatoes in a purely competitive market. This implies that Xavier's marginal revenue from an extra unit of tomatoes is always equal to the
A) unit price.
B) average cost.
C) variable cost.
D) unit profit.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, the seller is a price taker and the price of each unit of the product is determined by the market. Therefore, the marginal revenue of an extra unit sold will always be equal to the unit price.

Xavier Produces and Sells Tomatoes in a Purely Competitive Market