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.

---

Definitions:

Evaluating Solutions

The process of assessing various options to solve a problem by comparing their potential impacts and feasibility.

Rethinking

The process of revising or reconsidering previously held beliefs, ideas, or strategies.

Framing

A cognitive bias in which people react to a particular choice in different ways depending on how it is presented.

Concept

A mental category that is used to group objects, events, and characteristics.