If a Perfectly Competitive Firm Sells Its Product at the Market

question 119

Multiple Choice

If a perfectly competitive firm sells its product at the market price of $14 per unit,_____

• A)its marginal revenue is $14 and its average revenue is less than $14 per unit.
• B)its marginal revenue is less than $14 per unit and its average revenue is also less than $14 per unit.
• C)its average revenue is $14 and its marginal revenue is less than $14 per unit.
• D)its average revenue is $14 and its marginal revenue is also $14.
• E)its average and marginal revenue are $14 only for the first unit sold.

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Definitions:

Residual Income

The amount of income that an individual or company retains after deducting all expenses and cost of capital, including debt and equity costs.

Managerial Performance

Assessment of the effectiveness and efficiency of managers in achieving business objectives, often evaluated through financial and non-financial metrics.

Residual Income

The income that exceeds the required return on investment or minimum acceptable rate of return set by management.

Corporate Minimum Required Rate of Return

The lowest acceptable rate of return on an investment that a corporation deems sufficient for its operations and growth.