Question 1

Table 14-3
The table represents a demand curve faced by a firm in a competitive market. 
-Refer to Table 14-3. For this firm, the marginal revenue is

Accepted Answer

Marginal revenue is the additional revenue gained from selling one more unit. In a perfectly competitive market, marginal revenue equals the price of the good, which is $13 in this case.

Question 2

When a certain competitive firm produces and sells 100 units of output, marginal revenue is $80. When the same firm produces and sells 200 units of output, what is average revenue?

Accepted Answer

Since the firm is competitive, average revenue (AR) is equal to marginal revenue (MR).

Given that at 100 units of output, MR = $80. Therefore, AR = $80.

Hence, at 200 units of output, AR will still be $80.

Question 3

Table 14-6
The following table presents cost and revenue information for a firm operating in a competitive industry. 
-Refer to Table 14-6. What is the total revenue from selling 7 units?

Accepted Answer

The answer of Table 14-6
The following table presents cost and...

Question 4

Table 14-6
The following table presents cost and revenue information for a firm operating in a competitive industry. 
-Refer to Table 14-6. What is the marginal revenue from selling the 3rd unit?

Accepted Answer

The answer of Table 14-6
The following table presents cost and...

Question 5

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 6

Table 14-4
The table represents a demand curve faced by a firm in a competitive market. 
-Refer to Table 14-4. For this firm, the marginal revenue is

Accepted Answer

In a competitive market, the demand curve is horizontal, meaning that the firm is a price taker and can sell any quantity at the market price. Therefore, the marginal revenue is equal to the market price, which is $5 in this case.

Question 7

Table 14-4
The table represents a demand curve faced by a firm in a competitive market. 
-Refer to Table 14-4. For this firm, the average revenue is

Accepted Answer

Average revenue is total revenue divided by the number of units sold. In this case, total revenue is $50 and the number of units sold is 5. Therefore, average revenue is $50 / 5 = $10.

Question 8

Table 14-5
The table represents a demand curve faced by a firm in a competitive market. 
-Refer to Table 14-5. For this firm, the average revenue when 14 units are produced and sold is

Accepted Answer

The average revenue is calculated by dividing the total revenue by the number of units sold. When 14 units are produced and sold, the total revenue is $154 (14 x $11). Therefore, the average revenue is $11 ($154 / 14).

Question 9

Table 14-6
The following table presents cost and revenue information for a firm operating in a competitive industry. 
-Refer to Table 14-6. What is the total revenue from selling 4 units?

Accepted Answer

To find the total revenue from selling 4 units, we look at the row where Q=4. The price per unit is $120 and the quantity sold is 4 so the total revenue is 4 x $120 = $480.

To find the profit-maximizing level of output, we need to compare the marginal cost and marginal revenue at each level of output. From the table, we can see that MC=P for Q values of 1, 2, and 3. At Q=4, the marginal cost is $140 while the marginal revenue is $120. This means that producing the fourth unit would result in a loss of $20 ($120 - $140). Therefore, the profit-maximizing level of output is 3 units.

Question 10

For a competitive firm,

Accepted Answer

In a competitive market, the firm is a price taker and therefore the price (average revenue) remains constant regardless of the level of output. As a result, the marginal revenue is equal to the price (average revenue), since any additional unit sold will bring in revenue equal to the price. Therefore, average revenue equals marginal revenue in a competitive market.

Question 11

Table 14-3
The table represents a demand curve faced by a firm in a competitive market. 
-Refer to Table 14-3. For this firm, the average revenue is

Accepted Answer

Average revenue is calculated by dividing total revenue by the quantity sold. In a perfectly competitive market, average revenue equals the price of the good, which is $13 in this case.

Question 12

Table 14-6
The following table presents cost and revenue information for a firm operating in a competitive industry. 
-Refer to Table 14-6. What is the average revenue when 4 units are sold?

Accepted Answer

The answer of Table 14-6
The following table presents cost and...

Question 13

Which of the following statements is correct?

Accepted Answer

This statement is correct because in a perfectly competitive market, each firm is a price taker, which means that they cannot influence the price of the good. Therefore, the demand curve facing the firm is perfectly elastic, meaning that the price and marginal revenue are equal. Additionally, since the demand curve is a straight line in this case, the average revenue (which is the same as the price) is also equal to the marginal revenue. However, for firms operating in imperfectly competitive markets, such as monopolies or oligopolies, the demand curve facing the firm is downward sloping, and both average revenue and marginal revenue are less than the price of the good.

Question 14

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

In a competitive market, average revenue equals marginal revenue. Given the marginal revenue is $10, the average revenue is also $10. Total revenue of $1,000 divided by average revenue of $10 per unit results in 100 units sold.

Question 15

Table 14-5
The table represents a demand curve faced by a firm in a competitive market. 
-Refer to Table 14-5. For this firm, the price of the product is

Accepted Answer

The firm will maximize its profit by producing at the quantity where marginal cost equals the market price, which in this case is where quantity is 8 and price is $11. At any other quantity, the marginal cost exceeds the market price and the firm would make a loss. Therefore, the best choice for the firm is to produce 8 units at a price of $11.

Question 16

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 17

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

Accepted Answer

In a competitive market, firms are price takers, meaning they sell their goods at the market price. Therefore, for all firms, average revenue equals the price of the good.

Question 18

Table 14-4
The table represents a demand curve faced by a firm in a competitive market. 
-Refer to Table 14-4. For this firm, the price is

Accepted Answer

The price is $5 because it is the only price that is associated with a quantity of 0.

Question 19

Table 14-5
The table represents a demand curve faced by a firm in a competitive market. 
-Refer to Table 14-5. For this firm, the marginal revenue of the 12th unit is

Accepted Answer

Since the market is competitive, the firm is a price taker and faces a constant price of $11 regardless of the quantity it sells. Therefore, the marginal revenue of the 12th unit is also $11.

Question 20

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 the total revenue at 200 units of output, we need to know the price of the firm's product. However, we can use the information provided to calculate the firm's marginal revenue (MR), which is the additional revenue earned by producing one more unit of output.

We know that the firm's total revenue increased by $1,800 when it increased output from 150 units to 200 units. Therefore, the firm's marginal revenue from producing the 51st through 200th units of output is:

Marginal revenue = (Total revenue with 200 units - Total revenue with 150 units) / (200 - 150)
                  = $1,800 / 50
                  = $36

Assuming the firm is maximizing profit, it will continue to produce output as long as marginal revenue exceeds marginal cost. If the firm's marginal cost is less than $36 for the 200th unit, it will produce this unit and earn additional revenue. Since we do not have information about the firm's marginal cost, we cannot determine its total revenue at 200 units of output.

However, if we assume that the firm's marginal cost is constant at $20 per unit (for simplicity), we can calculate that its total revenue at 200 units of output would be:

Total revenue = (Price per unit) x (Number of units)
                         = [(Total revenue with 200 units - Total revenue with 150 units) / 50 + $20] x 200
                         = ($36 + $20) x 200
                         = $12,400

Therefore, the best choice is B, $2,400, since this is the only option that is greater than the initial total revenue of $1,800 and represents a plausible increase in revenue assuming constant marginal cost.

Quiz 14: Firms in Competitive Markets

Table 14-3 The table represents a demand curve faced by a firm in a competitive market. -Refer to Table 14-3. For this firm, the marginal revenue is

When a certain competitive firm produces and sells 100 units of output, marginal revenue is $80. When the same firm produces and sells 200 units of output, what is average revenue?

Table 14-6 The following table presents cost and revenue information for a firm operating in a competitive industry. -Refer to Table 14-6. What is the total revenue from selling 7 units?

Table 14-6 The following table presents cost and revenue information for a firm operating in a competitive industry. -Refer to Table 14-6. What is the marginal revenue from selling the 3rd unit?

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

Table 14-4 The table represents a demand curve faced by a firm in a competitive market. -Refer to Table 14-4. For this firm, the marginal revenue is

Table 14-4 The table represents a demand curve faced by a firm in a competitive market. -Refer to Table 14-4. For this firm, the average revenue is

Table 14-5 The table represents a demand curve faced by a firm in a competitive market. -Refer to Table 14-5. For this firm, the average revenue when 14 units are produced and sold is

Table 14-6 The following table presents cost and revenue information for a firm operating in a competitive industry. -Refer to Table 14-6. What is the total revenue from selling 4 units?

For a competitive firm,

Table 14-3 The table represents a demand curve faced by a firm in a competitive market. -Refer to Table 14-3. For this firm, the average revenue is

Table 14-6 The following table presents cost and revenue information for a firm operating in a competitive industry. -Refer to Table 14-6. What is the average revenue when 4 units are sold?

Which of the following statements is correct?

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?

Table 14-5 The table represents a demand curve faced by a firm in a competitive market. -Refer to Table 14-5. For this firm, the price of the product 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

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

Table 14-4 The table represents a demand curve faced by a firm in a competitive market. -Refer to Table 14-4. For this firm, the price is

Table 14-5 The table represents a demand curve faced by a firm in a competitive market. -Refer to Table 14-5. For this firm, the marginal revenue of the 12th unit 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, total revenue will be