Asked by Kaylee Greydanus on Jun 12, 2024
Verified
Whenever a perfectly competitive firm chooses to change its level of output, its marginal revenue
A) increases if MR < ATC and decreases if MR > ATC.
B) does not change.
C) always increases.
D) always decreases.
Marginal Revenue
The heightened revenue from selling an additional unit of a product or service.
Perfectly Competitive Firm
A theoretical concept describing a company that operates in a market where no single producer or consumer has the market power to influence prices.
ATC
Average total cost (ATC) is the total cost of production divided by the quantity of output produced, representing the cost per unit of output.
- Competence in scrutinizing the relationship between marginal revenue and cumulative revenue.
Verified Answer
MY
Malyun YahyeJun 14, 2024
Final Answer :
B
Explanation :
In a perfectly competitive market, the price of the product is determined by the market and is the same for all firms. Therefore, when a perfectly competitive firm changes its level of output, its marginal revenue (MR) remains constant and equal to the market price, regardless of the level of output.
Learning Objectives
- Competence in scrutinizing the relationship between marginal revenue and cumulative revenue.