The following table applies to a purely competitive industry composed of 100 identical firms. $\begin{array}{lcl}
Quantity&&Quantity\
Demanded &Price &Supplied\
\hline
400,000 & \$ 5 & 800,000 \
500,000 & 4 & 700,000 \
600,000 & 3 & 600,000 \
700,000 & 2 & 500,000 \
800,000 & 1 & 400,000
\end{array}$ Refer to the table.For each of the 100 firms in this industry,marginal revenue and total revenue will be:
A) $4 and $400,respectively.
B) $3 and $30,000,respectively.
C) $4 and $20,000,respectively.
D) $3 and $18,000,respectively.

Question

Quizplus · Accepted Answer

In a purely competitive market, the price of the product is equal to the marginal revenue for each firm. From the table, the equilibrium point where quantity demanded equals quantity supplied is at a price of $3 (600,000 units demanded and supplied). Therefore, each of the 100 identical firms would sell its output at this price, making the marginal revenue $3. To find the total revenue for each firm, we divide the total quantity (600,000) by the number of firms (100), which gives us 6,000 units per firm. Multiplying the quantity (6,000) by the price ($3) gives us a total revenue of $18,000 per firm.

The Following Table Applies to a Purely Competitive Industry Composed