Asked by Martin Thompson on May 16, 2024
Verified
In perfect competition:
A) price and average variable cost are the same.
B) price and marginal revenue are the same.
C) price and total revenue are the same.
D) total revenue and total variable cost are the same.
Marginal Revenue
The incremental revenue acquired by a business upon selling one more unit of a good or service.
Average Variable Cost
The total variable costs divided by the quantity of output produced, indicating the average amount spent on variable costs per unit of output.
- Acquire knowledge on how marginal revenue equates to the price in conditions of perfect competition.
Verified Answer
RM
Rachelle McgeeMay 17, 2024
Final Answer :
B
Explanation :
In perfect competition, price is equal to marginal revenue because the firm is a price taker and can sell as much output as it wants at the prevailing market price. Average variable cost and total variable cost are not necessarily equal to price in perfect competition. Total revenue is equal to price multiplied by the quantity sold.
Learning Objectives
- Acquire knowledge on how marginal revenue equates to the price in conditions of perfect competition.