Which of the following best represents the marginal revenue for a firm in a perf

Question

Which of the following best represents the marginal revenue for a firm in a perfectly competitive market Average variable cost of the good Price of the good Average fixed cost of the good None of the above Which of the following best represents the average revenue for a firm in a perfectly competitive market Average variable cost of the good Price of the good Average fixed cost of the good None of the above Which of the following curves is also the average revenue curve of a monopolist His demand curve His marginal revenue curve His marginal cost curve His average variable cost curve When marginal cost is constant, say, $5 per unit of the good, which of the following statement is INCORRECT Marginal cost curve is parallel to the horizontal axis Average variable cost is also $5 per unit Average variable cost curve overlaps with marginal cost curve Total variable cost is also constant

Explanation / Answer

6. In a perfectly competitive environment, marginal revenue of the firm is equal to the Price of the Good.

So option B is correct
Revenue earned by selling each extra good is price which is called as marginal revenue

7. In a perfectly competitive environment, average revenue is the price of the good.
So again Option B is correct.
Any firm don't have much leverage to force the price of a good to increase or decrease. It follows the price according to demand and supply and generally, in this market, price would be constant. So average revenue = marginal revenue = price of the good

8. Average revenue of a monopolist firm is its demand curve.
So option A is correct.
For perfectly competitive firm, average revenue = marginal revenue = price. This curve is flat and parallel to X - Axis.
whereas in case of monopoly, firm has to decrease price in order to sell more goods, so average revenue curve is downward sloping similar as its demand curve.

9. When marginal cost of constant,
Marginal cost curve is parallel to its horizontal axis. Option A is correct

Total Variable cost cannot be constant. When firm increases production, fixed cost is always contanst and average fixed costs goes down; and so to keep marginal cost constant variable cost has to be increasing.

So only option D is incorrect.

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