Question

A perfectly competitive firm has total revenues equal to $360 when it produces forty units. what is the marginal revenue for the forty-first unit?
a) $8.88
b) $360
c) $9
d) $361

Answer 1

$9 is the marginal revenue for forty first unit.

The increase in revenue that comes from selling one more unit of output is known as marginal revenue. Although marginal revenue can remain constant at a certain level of output, it will eventually start to decline as the output level rises due to the law of diminishing returns.

According to economic theory, firms that are completely competitive keep on producing goods until marginal revenue and marginal cost are equal. Multiple situations call for the usage of marginal revenue. Businesses examine the market's client demand for items using historical marginal revenue data. Additionally, they set the most effective and efficient pricing using the information. Last but not least, businesses rely on marginal revenue to better comprehend estimates; from this data, future production schedules, such as planning for material requirements, are then derived.

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