Question 1

For a competitive firm,

Accepted Answer

In a perfectly competitive market, a firm's average revenue (AR) is equal to its marginal revenue (MR) because the firm has no control over the price at which it sells its goods or services. The price is set by the market, so the firm must sell its output at the prevailing price, and any additional unit it sells will earn the same price as its last unit. Therefore, AR = P = MR for a competitive firm. Total revenue (TR) for a firm is the product of price times quantity sold, which is equal to the product of AR times quantity sold. Therefore, TR = AR x Q, and since AR = MR in a perfectly competitive market, we can say that TR = MR x Q. Hence, total revenue equals marginal revenue for a competitive firm.

Question 2

Suppose a firm in a competitive market earned $1,000 in total revenue and had a marginal revenue of $10 for the last unit produced and sold.What is the average revenue per unit,and how many units were sold?

Accepted Answer

The answer of Suppose a firm in a competitive market...

Question 3

Suppose that a firm operating in perfectly competitive market sells 400 units of output at a price of $4 each.Which of the following statements is correct? (i)Marginal revenue equals $4.
(ii)Average revenue equals $100.
(iii)Total revenue equals $1,600.

Accepted Answer

(i) is correct because in a perfectly competitive market, a firm's marginal revenue equals the price of the product.
(iii) is also correct because total revenue is calculated by multiplying the price per unit by the quantity sold, which equals $4 x 400 = $1,600.
(ii) is incorrect because average revenue is calculated by dividing total revenue by the quantity sold, which equals $1,600/400 = $4, not $100.

Question 4

Which of the following statements regarding a competitive firm is correct?

Accepted Answer

The answer of Which of the following statements regarding a...

Question 5

Suppose that a firm operating in perfectly competitive market sells 200 units of output at a price of $3 each.Which of the following statements is correct? (i)Marginal revenue equals $3.
(ii)Average revenue equals $600.
(iii)Average revenue exceeds marginal revenue,but we don't know by how much.

Accepted Answer

In a perfectly competitive market, the firm is a price taker and sells its output at the market price. Therefore, the firm's marginal revenue is equal to the price of the product, which is $3 in this case. However, the average revenue is calculated by dividing the total revenue by the quantity sold, which gives ($3 x 200)/200 = $3. Therefore, option (i) is correct, but option (ii) is incorrect. Option (iii) is also incorrect because the marginal revenue and average revenue are equal in a perfectly competitive market.

Question 6

Table 13-4
 
-Refer to Table 13-4.For a firm operating in a competitive market,the marginal revenue is

Accepted Answer

In a competitive market, the price is equal to the marginal revenue. Therefore, the price for each unit is $15, and selling any additional unit would just bring in another $15. It is not economically feasible to produce more if the cost of producing additional units exceeds $15. Therefore, the firm should produce 4 units where the price/marginal revenue is equal to the minimum average variable cost, which is $10.50.

Question 7

Table 13-6
The following table presents cost and revenue information for a firm operating in a competitive industry.
 
-Refer to Table 13-6.What is the marginal revenue from selling the 3rd unit?

Accepted Answer

The answer of Table 13-6
The following table presents cost and...

Question 8

Which of the following statements is correct?

Accepted Answer

For competitive firms, the market sets the price, so the firm cannot affect the price by changing the quantity produced. As a result, the price stays constant, and the price is also equal to the marginal revenue because the additional revenue from selling one more unit of output is equal to the price of that unit. Therefore, for competitive firms, average revenue and marginal revenue are the same. However, for all other firms (such as monopolies or oligopolies), marginal revenue is less than the price of the good because the firm must lower the price to sell additional units of output. Therefore, only for competitive firms does average revenue equal marginal revenue.

Question 9

Suppose that a firm operating in perfectly competitive market sells 300 units of output at a price of $3 each.Which of the following statements is correct? (i)Marginal revenue equals $3.
(ii)Average revenue equals $100.
(iii)Total revenue equals $300.

Accepted Answer

The answer of Suppose that a firm operating in perfectly...

Question 10

Table 13-5
 
-Refer to Table 13-5.The price of the product is

Accepted Answer

The answer of Table 13-5
 
-Refer to Table 13-5.The price...

Question 11

Table 13-6
The following table presents cost and revenue information for a firm operating in a competitive industry.
 
-Refer to Table 13-6.What is the average revenue when 4 units are sold?

Accepted Answer

To find the average revenue when 4 units are sold, we can divide the total revenue (which is $480) by the number of units sold (which is 4). This gives us an average revenue of $120 per unit. 
The best choice for the firm in this competitive industry would be to produce and sell 5 units, as this is the level of output where the marginal cost ($75) equals the marginal revenue ($120). Any level of output beyond this point would result in decreasing profits for the firm.

Question 12

Table 13-6
The following table presents cost and revenue information for a firm operating in a competitive industry.
 
-Refer to Table 13-6.What is the total revenue from selling 4 units?

Accepted Answer

The answer of Table 13-6
The following table presents cost and...

Question 13

Table 13-6
The following table presents cost and revenue information for a firm operating in a competitive industry.
 
-Refer to Table 13-6.What is the total revenue from selling 7 units?

Accepted Answer

The answer of Table 13-6
The following table presents cost and...

Question 14

Table 13-5
 
-Refer to Table 13-5.The average revenue when 14 units are produced and sold is

Accepted Answer

The answer of Table 13-5
 
-Refer to Table 13-5.The average...

Question 15

Suppose a firm in a competitive market produces and sells 150 units of output and earns $1,800 in total revenue from the sales.If the firm increases its output to 200 units,the average revenue of the 200th unit will be

Accepted Answer

In a competitive market, the price of the product is determined by the market forces of demand and supply. Therefore, the firm cannot change the price of its product by increasing its output. Thus, the average revenue of the 200th unit will be the same as that of the previous 199 units, which is $12 ($1,800/150). So, the correct option is (C).

Question 16

Table 13-5
 
-Refer to Table 13-5.The marginal revenue of the 12th unit is

Accepted Answer

The marginal revenue is the change in total revenue from selling one more unit. From the table, we can see that the total revenue from selling 11 units is $110. The total revenue from selling 12 units is $121. Therefore, the marginal revenue of the 12th unit is $11 ($121 - $110).

Question 17

Suppose that a firm operating in perfectly competitive market sells 100 units of output.Its total revenues from the sale are $500.Which of the following statements is correct? (i)Marginal revenue equals $5.
(ii)Average revenue equals $5.
(iii)Price equals $5.

Accepted Answer

The answer of Suppose that a firm operating in perfectly...

Question 18

Suppose a firm in a competitive market produces and sells 150 units of output and earns $1,800 in total revenue from the sales.If the firm increases its output to 200 units,total revenue will be

Accepted Answer

To find out the total revenue at 200 units, we need to know the price at which the firm sells its output. However, we can use the information given to make an assumption about the price elasticity of demand in this market.

Since the market is competitive, the firm cannot charge a price higher than the market price without losing customers. Therefore, we can assume that the price remains constant regardless of the firm's output level.

Using this assumption, we can calculate the price per unit as follows:

Price per unit = Total revenue / Units sold = $1,800 / 150 = $12

Thus, if the firm increases its output to 200 units, its total revenue will be:

Total revenue = Price per unit * Units sold = $12 * 200 = $2,400

Therefore, the answer is (B) $2,400.

Question 19

Firms operating in competitive markets produce output levels where marginal revenue equals

Accepted Answer

The answer of Firms operating in competitive markets produce output...

Question 20

Table 13-4
 
-Refer to Table 13-4.For a firm operating in a competitive market,the average revenue is

Accepted Answer

The answer of Table 13-4
 
-Refer to Table 13-4.For a...

Quiz 13: Firms in Competitive Markets

For a competitive firm,

Suppose a firm in a competitive market earned $1,000 in total revenue and had a marginal revenue of $10 for the last unit produced and sold.What is the average revenue per unit,and how many units were sold?

Suppose that a firm operating in perfectly competitive market sells 400 units of output at a price of $4 each.Which of the following statements is correct? (i) Marginal revenue equals $4. (ii) Average revenue equals $100. (iii) Total revenue equals $1,600.

Which of the following statements regarding a competitive firm is correct?

Suppose that a firm operating in perfectly competitive market sells 200 units of output at a price of $3 each.Which of the following statements is correct? (i) Marginal revenue equals $3. (ii) Average revenue equals $600. (iii) Average revenue exceeds marginal revenue,but we don't know by how much.

Table 13-4 -Refer to Table 13-4.For a firm operating in a competitive market,the marginal revenue is

Table 13-6 The following table presents cost and revenue information for a firm operating in a competitive industry. -Refer to Table 13-6.What is the marginal revenue from selling the 3rd unit?

Which of the following statements is correct?

Suppose that a firm operating in perfectly competitive market sells 300 units of output at a price of $3 each.Which of the following statements is correct? (i) Marginal revenue equals $3. (ii) Average revenue equals $100. (iii) Total revenue equals $300.

Table 13-5 -Refer to Table 13-5.The price of the product is

Table 13-6 The following table presents cost and revenue information for a firm operating in a competitive industry. -Refer to Table 13-6.What is the average revenue when 4 units are sold?

Table 13-6 The following table presents cost and revenue information for a firm operating in a competitive industry. -Refer to Table 13-6.What is the total revenue from selling 4 units?

Table 13-6 The following table presents cost and revenue information for a firm operating in a competitive industry. -Refer to Table 13-6.What is the total revenue from selling 7 units?

Table 13-5 -Refer to Table 13-5.The average revenue when 14 units are produced and sold is

Suppose a firm in a competitive market produces and sells 150 units of output and earns $1,800 in total revenue from the sales.If the firm increases its output to 200 units,the average revenue of the 200th unit will be

Table 13-5 -Refer to Table 13-5.The marginal revenue of the 12th unit is

Suppose that a firm operating in perfectly competitive market sells 100 units of output.Its total revenues from the sale are $500.Which of the following statements is correct? (i) Marginal revenue equals $5. (ii) Average revenue equals $5. (iii) Price equals $5.

Suppose a firm in a competitive market produces and sells 150 units of output and earns $1,800 in total revenue from the sales.If the firm increases its output to 200 units,total revenue will be

Firms operating in competitive markets produce output levels where marginal revenue equals

Table 13-4 -Refer to Table 13-4.For a firm operating in a competitive market,the average revenue is