Economics Homework Help

Question

A) A firm in a competitive market receives $10,000 in total revenue and has marginal revenue of $20. What is the average revenue?

B) Using the same information from the preceding question, what is the price for this perfectly competitive firm?

Answer 1

Average Revenue is found by dividing total revenue by the quantity sold. However in a (perfectly) competitive market, all the firms sell identical products so the marginal revenue is the same as the price and also the same as average revenue, so average revenue is $20.

Both price and average revenue are $20.