For a perfectly competitive firm, marginal revenue:

(A) is equal to the market demand curve.

(B) will increase if the firm increases its sales volume.

(C) will decrease if the firm increases its sales volume.

(D) is equal to the market price.

Question

Emilee Moon

Business

6 January, 18:41

For a perfectly competitive firm, marginal revenue:

(A) is equal to the market demand curve.

(B) will increase if the firm increases its sales volume.

(C) will decrease if the firm increases its sales volume.

(D) is equal to the market price.

+2

Answers (1)

Know the Answer?

Taylor Hickman · Answer 1

Answer: Option (D) is correct.

Explanation:

Correct option: is equal to the market price.

Marginal revenue is the change in the total revenue which arises by selling an additional unit of the commodity.

In a perfectly competitive market, there are large number of buyers and sellers in a market. Single buyer and single seller won't be able to affect the price of the market.

Price of the product will be determined by the market forces. In this market, individual firms are generally facing a horizontal demand curve where price is equal to the marginal revenue. Because demand curve is parallel to x-axis and it is perfectly elastic, so there will be no changes in prices if there is a change in a demand.

For a perfectly competitive firm, marginal revenue:(A) is equal to the market demand curve.(B) will increase if the firm increases its sales volume.(C) will decrease if the firm increases its sales volume.(D) is equal to the market price.

For a perfectly competitive firm, marginal revenue:

(A) is equal to the market demand curve.

(B) will increase if the firm increases its sales volume.

(C) will decrease if the firm increases its sales volume.

(D) is equal to the market price.