For a price-taking firm, marginal revenue Select one: a. is the addition to total revenue from producing one more unit of output

Question

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For a price-taking firm, marginal revenue Select one: a. is the addition to total revenue from producing one more unit of output

. b. decreases as the firm produces more output. c. is equal to price at any level of output. d. both a and b e. both a and c

Business

1 answer:

Ksju [112] · Answer 1 · 2022-07-15T23:24:24+03:00

Answer: Option (e) is correct.

Explanation:

Correct Option: both a and c

Marginal revenue is the amount that is added to the total revenue, this amount is created due to an additional unit of output produced by the firm.

Price taking firms are the firms which operates in a perfectly competitive market. In this type of market condition, prices are determined by market forces. Hence, the constant prices will result in unchanged marginal revenue and thus it is horizontal to the x-axis at any given price level. Price level remains the same at any level of output.