Which of the following statements is correct?
A)For all firms, marginal revenue equals the price of the good.
B)Only for competitive firms does average revenue equal the price of the good.
C)Marginal revenue can be calculated as total revenue divided by the quantity sold.
D)Only for competitive firms does average revenue equal marginal revenue.

Question

Quizplus · Accepted Answer

For competitive firms, both average revenue (total revenue divided by quantity sold) and marginal revenue (the change in total revenue from selling one more unit) equal the price of the good. This is because competitive firms are price takers and cannot influence the market price.

Which of the Following Statements Is Correct