Hello i am stuck on this question, thank you for the help 2. The demand curve fa

Question

Hello i am stuck on this question, thank you for the help

2. The demand curve facing a competitive firm The following graph shows the daily market for medium cardboard boxes in New York City. 20 Demand Supply 18 16 14 8 12 8 10 1 3 5 7 8 10 QUANTITY (Millions of medium boxes) Suppose that Talero is one of more than a hundred competitive firms in New York City that produce such cardboard boxes Based on the previous graph showing the daily market demand and supply curves, the price Talero must take as given is

Explanation / Answer

Q2. It has been provided that Talero is one of more than hundred competitive firms in New York City. In case of perfect competition, it is the market or industry taking into account the market demand and market supply decide price while firm accepts the price as decided by the industry.

The given figure shows that market demand curve and market supply curve are intersecting each other corresponding to price of $10 per medium box.

This is the market price and each firm like Talero has to accept this price.

So,

Based on the previous graph showing the daily market demand and supply curves, the price Talero must take as given is $10.

Following is the complete table -

In case of competitive firm, demand curve is identical to average revenue curve and marginal revenue curve.

Since, Talero is a competitive firm, the demand curve it faces is identical to average revenue curve and marginal revenue curve.

Hence, the correct answer is option (1) and (4).

Quantity Price Total Revenue Marginal Revenue Average Revenue (Boxes) (Dollar per box) (Dollars) (Dollars) (Dollars) 0 10 0 - - 1 10 10 10 10 2 10 20 10 10 3 10 30 10 10

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