Sea Bass Inc. sells sea bass in a perfectly competitive market. Sea Bass Inc. is

Question

Sea Bass Inc. sells sea bass in a perfectly competitive market. Sea Bass Inc. is able to sell sea bass for $700 per unit. In this market, there are 2,000 firms competing with one another. Last year, Sea Bass Inc. was able to earn an economic profit of $1,000,000. The firm has purchased a permit to fish this season, insurance in case one of their workers gets hurt on the job, and a boat. Together, these items represent all of the firm's fixed costs and sum to $100,000. Last year, Sea Bass Inc.'s total revenue was $1,300,000. What is the marginal revenue per unit for this firm? Number $ 300.3 Incorrect. It's important to recognize that Sea Bass Inc. is a perfectly competitive firm. This means that Sea Bass Inc. can sell all the fish that it can catch at the market price. How are price and marginal revenue related in perfect competition?

Explanation / Answer

In a perfectly competitive market price equals Marginal revenue. Thus MR is $700.

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