The figure given below shows the revenue and cost curves of a perfectly competitive firm.Figure 10.1

-Suppose a perfectly competitive firm's total revenue is equal to $210 and its output is 70 units, when its marginal-cost curve intersects the marginal-revenue curve. What is the marginal revenue earned by the firm?

Question

The figure given below shows the revenue and cost curves of a perfectly competitive firm.Figure 10.1
 
-Suppose a perfectly competitive firm's total revenue is equal to $210 and its output is 70 units, when its marginal-cost curve intersects the marginal-revenue curve. What is the marginal revenue earned by the firm?

Quizplus · Accepted Answer

When the marginal-cost curve intersects the marginal-revenue curve, the firm produces at the point where marginal cost equals marginal revenue. In this case, the firm produces 70 units and earns a total revenue of $210. Therefore, the average revenue per unit is $210/70 = $3.

Since the firm is a price-taker in a perfectly competitive market, the marginal revenue is equal to the average revenue, which is $3. So, the answer is B.

The Figure Given Below Shows the Revenue and Cost Curves