Answer the question on the basis of the following data confronting a firm: $\begin{array}{l}
\begin{array}{ccr}
&&\text { Marginal }\
\text { Output } & & \text { Reven } \
\hline
0&&--\
1 & & \$ 16 \
2 & & 16 \
3 & & 16 \
4 & & 16 \
5 & & 16
\end{array}
\begin{array}{c}
Marginal\
Cost\
\hline
--\
\$ 10 \
9 \
13 \
17 \
21
\end{array}
\end{array}$ Refer to the data.This firm is selling its output in a(n):
A) monopolistically competitive market.
B) monopolistic market.
C) purely competitive market.
D) oligopolistic market.

Question

Quizplus · Accepted Answer

In a purely competitive market, the firm is a price taker, and the price of the good is determined by the market demand and supply. In this case, the marginal revenue of the firm is constant at $16, which indicates that the firm is in perfect competition. Additionally, the marginal cost curve intersects with the marginal revenue curve at the point where marginal cost equals $16, which is also the point where the firm maximizes its profit. Therefore, the firm has no market power and is operating in a purely competitive market.

Answer the Question on the Basis of the Following Data