What Is the Relationship Among the Following Variables for a Perfectly

question 181

Multiple Choice

What is the relationship among the following variables for a perfectly competitive firm: the market price, average revenue and marginal revenue?

• A)Average revenue is equal to the market price; average revenue is greater than marginal revenue.
• B)The market price is equal to both average revenue and marginal revenue.
• C)Average revenue is equal to marginal revenue; average revenue is greater than the market price.
• D)As a firm lowers the market price to sell more output, marginal revenue and average revenue will be less than the market price.

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Definitions:

Indirect Planning

The process of setting broader goals and strategies that indirectly guide actions and decisions without specific, detailed plans.

Interest Rates

The fee, shown as a percentage of the principal amount, that a lender imposes on a borrower for the usage of its assets.

Collection Period

The average number of days it takes for a company to receive payment after a sale has been made, indicative of the efficiency of its credit and collection policies.

Accounts Receivable

Financial obligations of customers towards a business for delivered goods or services pending payment.