Suppose a firm in a competitive market receives $1000 in total revenue and it has a marginal revenue of $20.What is the average revenue, and how many units were sold?

Question

Quizplus · Accepted Answer

Average revenue is equal to the total revenue divided by the quantity sold. Therefore, if the total revenue is $1000 and the marginal revenue is $20, we know that the firm sold 50 units (since $1000/$20 = 50). The average revenue is simply the total revenue divided by the quantity sold, which is $20 ($1000/50 = $20). Choice B is the only option that has both the correct average revenue and quantity sold.

Suppose a Firm in a Competitive Market Receives $1000 in Total