For an individual firm operating in a competitive market, marginal revenue equals
A)average revenue and the price for all levels of output.
B)average revenue, which is greater than the price for all levels of output.
C)average revenue, the price, and marginal cost for all levels of output.
D)marginal cost, which is greater than average revenue for all levels of output.

Question

Quizplus · Accepted Answer

In a competitive market, the price of the product is determined by the market and is constant for each unit sold by the firm. Therefore, the marginal revenue (the revenue from selling one more unit) equals the price of the product, which also equals the average revenue (total revenue divided by the quantity sold). Choices B, C, and D introduce conditions that do not apply to firms in competitive markets.

For an Individual Firm Operating in a Competitive Market, Marginal