For a Small Firm in an Extremely Competitive Industry,marginal Revenue

question 69

Multiple Choice

For a small firm in an extremely competitive industry,marginal revenue is always equal to price because:

• A)the firm has no ability to influence the market price.(True Answer )Correct
• B)each firm has large economies of scale.
• C)each firm has large fixed costs.
• D)if consumers increase their demand for the product, producer surplus falls.

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Definitions:

Marginal Cost

The expense associated with manufacturing an extra unit of a product or service.

Marginal Revenue

The increase in revenue that results from the sale of one additional unit of a product or service.

Positive Profit

Positive profit occurs when a business's total revenues exceed its total costs, indicating financial gain from its operations.

Marginal Costs

Relates to the additional expenses faced when a business decides to increase its output or product quantity by one more unit.