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.

Question

Quizplus · Accepted Answer

i) Marginal revenue equals $4 because in a perfectly competitive market, marginal revenue is equal to the price.

ii) Average revenue equals total revenue divided by the number of units sold. Therefore, average revenue in this case would be $4, not $100.

iii) Total revenue equals price per unit times the quantity sold, which is $4 times 400 units, equaling $1,600. Therefore, iii) is correct.

Therefore, the correct answer is C) i) and iii) only.

Suppose That a Firm Operating in Perfectly Competitive Market Sells