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Mariana [72]
3 years ago
7

A firm sells peanuts in a perfectly competitive market. Upon increasing production output from 60 packages to 75 packages, the t

otal revenue increased from $300 to $375. What was the marginal revenue of this increase in production?
Business
1 answer:
I am Lyosha [343]3 years ago
3 0

Answer:

$75

Explanation:

A perfect competition is characterised by many buyers and sellers of homogenous goods and services. Market prices are set by the forces of demand and supply. There are no barriers to entry or exit of firms into the industry.

In the long run, firms earn zero economic profit. If in the short run firms are earning economic profit, in the long run firms would enter into the industry. This would drive economic profit to zero.

Also, if in the short run, firms are earning economic loss, in the long run, firms would exit the industry until economic profit falls to zero.

The price per unit = $300 / 60 = $5

The marginal revenue for one unit is $5

Production increased by 15 units, so marginal revenue increased by $5 × 15 = $75

I hope my answer helps you

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Answer:

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Explanation:

Giving the following information:

Gelb Company currently manufactures 49,500 units per year of a key component for its manufacturing process. Variable costs are $5.15 per unit, fixed costs related to making this component are $75,000 per year, and allocated fixed costs are $70,500 per year. The allocated fixed costs are unavoidable whether the company makes or buys this component. The company is considering buying this component from a supplier for $3.90 per unit

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