Question

Assume that the market for pencils is perfectly competitive. The market equilibrium price is $0.50 and Perry's Pencil Company has been selling 10,000 pencils per month. If he sells one more pencil, his marginal revenue will be

Answer 1

The marginal revenue is $0.5 which is being earned if the company sells one more pencil.

What is total revenue?

Total revenue is the amount being obtained by the firm after selling the goods and services in the market.

Given values:

Quantity sold: 10,000 units

Marginal quantity: 10,001 units

Equilibrium price: $0.50

Computation of marginal revenue earned:

$\rm\ Marginal \rm\ revenue=\frac{ \rm\ Additional \rm\ revenue-\rm\ Total \rm\ revenue}{\rm\ Total \rm\ quanitiy - \rm\ Additional \rm\ quantity} \\\rm\ Marginal \rm\ revenue=\frac{ 10,001 \times\ \ 0.50 - 10,000 \times\ \ 0.50}{10,001-10,000} \\\rm\ Marginal \rm\ revenue=\frac{\ 5,000.50-\ 5,000}{1} \\\rm\ Marginal \rm\ revenue=\ 0.50$

Therefore, when the company sells one more pencil then it earned a marginal revenue of $0.50.

Learn more about the marginal revenue in the related link:

brainly.com/question/13563292

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