Suppose a firm in a competitive market produces and sells 8 units of output and has a marginal revenue of $8.00.What would be the firm's total revenue if it instead produced and sold 4 units of output?

Question

Quizplus · Accepted Answer

Marginal revenue is the additional revenue generated from selling one more unit of output. If the firm produces 8 units and has a marginal revenue of $8.00, then the total revenue from selling all 8 units would be:

Total revenue = Price x Quantity
Total revenue = Marginal revenue x Number of units
Total revenue = $8.00 x 8
Total revenue = $64.00

If the firm instead produced and sold 4 units of output, the marginal revenue would still be $8.00, but the total revenue would be:

Total revenue = Price x Quantity
Total revenue = Marginal revenue x Number of units
Total revenue = $8.00 x 4
Total revenue = $32.00

Therefore, the best choice is C, $32.00.

Suppose a Firm in a Competitive Market Produces and Sells