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Suppose that in a competitive market the equilibrium price is $2
Suppose that in a competitive market the equilibrium price is $2.50. What is marginal revenue for the last unit sold by the typical firm in this market? a less than $2.50 b. The marginal revenue cannot be determined without knowing the actual quantity sold by the typical fim o more than $2.50 d. exactly $2.50
Expert Solution
In the competitive market the equilibrium price is $2.50
The marginal revenue is exactly $2.50.
In competitive market, Price = Average Revenue = Marginal Revenue. Firm in the competitive market is price taker . Industry with the intersection of market demand and supply, equilibrium point depicted the equilibrium price and quantity. Industry ' Price maker' decides The equilibrium price = $2.50 therefore
In firm the marginal revenue Is exactly equal to the price.
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