Practice Average Revenue And Marginal Revenue (4.2.1) - The Theory of the Firm under Perfect Competition

Practice: Average Revenue and Marginal Revenue

Lesson 4.2.1The Theory of the Firm under Perfect Competition

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8 questions

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6 sample questions

Question 1.
What is the formula for Total Revenue in a perfectly competitive market?
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Think of how much a firm earns per unit it sells.
Question 2.
Define Average Revenue.
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What happens to TR when you divide it by quantity?
3Question 3.
What is the formula for Total Revenue?
- TR = Price × Quantity
- TR = Price + Quantity
- TR = Quantity - Price
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Think about how revenue can be calculated.
4Question 4.
True or False: In a perfectly competitive market, MR equals AR.
- True
- False
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Consider the definition of price-setting behavior in perfect competition.
Question 5.
A firm produces 100 units at a price of Rs 15 per unit. They decide to sell one more unit, raising their total revenue to Rs 1,515. What is the Marginal Revenue for that additional unit?
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Focus on the change in Total Revenue.
Question 6.
A company is analyzing its profit-maximizing output. They find that their Marginal Cost for the 10th unit is Rs 20. If they are selling this unit for Rs 25, what should they do?
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Remember the relationship between Marginal Revenue and Marginal Cost for profit maximization.

4 more questions in this section. Enroll free to practise them all.