Suppose that a firm operating in perfectly competitive market sells 300 units of output at a price of $3 each. Which of the following statements is correct? (i)
Marginal revenue equals $3.
(ii)
Average revenue equals $100.
(iii)
Total revenue equals $300.
A)(i) only
B)(iii) only
C)(i) and (ii) only
D)(i), (ii), and (iii)

Question

Quizplus · Accepted Answer

In a perfectly competitive market, marginal revenue equals the price, so (i) is correct. Total revenue is price times quantity, so $3 * 300 = $900, not $300, making (iii) incorrect. Average revenue equals the price, which is $3, not $100, making (ii) incorrect.

Suppose That a Firm Operating in Perfectly Competitive Market Sells