Which of the following statements about marginal revenue for a perfectly competitive firm is incorrect, where TR stands for total revenue, P stands for price, and q stands for output?
A) $M R = \frac { \Delta T R } { q }$
B) $M R = P$
C) $M R = \frac { \Delta T R } { \Delta q }$
D)Marginal revenue is the rate at which total revenue changes with respect to changes in output.

Question

Quizplus · Accepted Answer

The formula in statement A is incorrect. The correct formula for marginal revenue for a perfectly competitive firm is MR = ∆TR/∆q, which is statement C. Statement B is also correct, as a perfectly competitive firm faces a horizontal demand curve and therefore the price remains constant. Statement D is also correct as it explains the concept of marginal revenue. Option A is incorrect because it calculates the marginal revenue as the change in total revenue divided by the quantity sold, which is not the correct formula for marginal revenue in a perfectly competitive market. The correct formula is MR=P, indicating that the marginal revenue is equal to the market price. Option B is the correct statement. Option C is another correct way of writing the formula for marginal revenue: the change in total revenue divided by the change in quantity. Option D is a correct statement about marginal revenue.

Which of the Following Statements About Marginal Revenue for a Perfectly