Suppose That a Firm Operating in Perfectly Competitive Market Sells

question 563

Multiple Choice

Suppose that a firm operating in perfectly competitive market sells 200 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 $600.
(iii)
Average revenue exceeds marginal revenue, but we don't know by how much.

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

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Definitions:

Negative-Sum Game

A situation in game theory where the participants' total losses outweigh their total gains, often resulting in a net loss shared by all participants.

Stackelberg Duopoly

A market structure in which one firm sets its output first, and the other firm then decides its output level in response, leading to a hierarchical decision-making process.

Strategic Game

A concept in game theory in which players are aware of the strategies of other participants and are making decisions based on predicting the actions of others.

Extensive Form

A way of representing a game in game theory that illustrates the sequence of moves, the knowledge of each player at different points, and their possible strategies.