If a firm in a purely competitive industry is confronted with an equilibrium price of $5, its marginal revenue
A)may be either greater or less than $5.
B)will also be $5.
C)will be less than $5.
D)will be greater than $5.

Question

Quizplus · Accepted Answer

In a purely competitive market, the price of the product is determined by the market and is the same for all firms. Therefore, the marginal revenue, which is the additional revenue a firm earns by selling one more unit of a product, is equal to the market price. Hence, if the equilibrium price is $5, the marginal revenue for the firm will also be $5.

If a Firm in a Purely Competitive Industry Is Confronted