Question

Assume for a perfectly competitive firm, the market price of one box of tissues is $2. What is the marginal revenue when sales increase from 100 boxes to 200 boxes?

Answer 1

Answer:

The marginal revenue = $2

Explanation:

Firstly we calculate the value in dollars for the number of boxes sold

For 100 boxes, we have 100 * 2 = $200

For 200 boxes, we have 200 * 2 = $400

Mathematically, the marginal revenue = (cost of 200 boxes- cost of 100 boxes)/difference in quantity

= (400-200)/(200-100) = 200/100 = $2

Thus affirms the fact that for a perfectly competitive firm, marginal revenue MR = P (price)