Suppose That a Firm Operating in Perfectly Competitive Market Sells

question 169

Multiple Choice

Suppose that a firm operating in perfectly competitive market sells 300 units of output at a price of $3 each. Which of the following statements is correct? (i)
Marginal revenue equals $3.
(ii)
Average revenue equals $100.
(iii)
Total revenue equals $300.

• A)(i) only
• B)(iii) only
• C)(i) and (ii) only
• D)(i), (ii), and (iii)

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Definitions:

Shortage

A situation in which the demand for a good or service exceeds its supply in a market.

Surplus

is an economic situation in which the quantity of a good supplied exceeds the quantity demanded at the current price, often leading to a decrease in prices.

Supply Determined

Refers to market situations where the quantity of products available in the market is primarily dictated by the supply side factors such as production capacity and inventory levels rather than by consumer demand.

Price Rationing

The process of distributing goods and services among consumers by setting a price level that balances demand with supply.