2. The demand curve facing a competitive firm The following graph shows the dail

Question

2. The demand curve facing a competitive firm The following graph shows the daily market for large cardboard boxes in San Diego Supply QUANTITY Mlos are baes Suppose that Falero is one of more than a hundred competitive firms in San Diego that produce such cardboard boxes Based on the preceding graph showing the daily market demand and supply curves, the price Falero must take as given is $20 Fill in the price and the total, marginal, and average revenue Falero earns when it produces 0, 1, 2, or 3 boxes each day Quantity Price (Boxes) (Dollars per box) (Dollars) Total Revenue Marginal Revenue Avera Dollars) ge Revenue (Dollars per box) The demand curve that Falero faces is identical to which of its other curves? Check all that apply Marginal revenue curve Marginal cost curve Supply curve Average revenue curve

Explanation / Answer

Ans:

1) The price based on the demand and supply is $20.

2)

Table showing Total, marginal and average revenue

3) Marginal revenue curve

A competitive firm faces a elastic demand curve at the market price this is because it can sell the quantity is chooses to sale at that price. when all sales are made at market price, the change in total revenue from sale of additional unit is equal to the price. hence marginal revenue curve is the same as firms demand curve.

Quantity Price Total revenue Marginal Revenue Average Revenue 0 0 0 0 0 1 $29 $29 $29 $29 2 $27 $54 $25 $27 3 $24 $72 $18 $24

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