If a firm is able to sell any quantity of good at given price. Then the marginal revenue will be__________?
a. Greater to AR b. Less than AR?
c. Equal to AR d. Zero?

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Solution

Dear Student,

Consider this Table

Price Quantity Revenue Avg. Revenue Marginal Revenue

20 8 160 20 -

20 9 180 20 20

20 10 200 20 20

Suppose the price is fixed at Rs. 20 and the quantity demanded is 8, 9 and 10 units respectively.
Revenue = Price * Quantity
Avg. Revenue = Total Revenue/Quantity
Marginal Revenue = Additional Revenue due to increase in one unit of quantity.

Thus, we can conclude that Marginal Revenue = Average Revenue

Regards

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The marginal revenue is equal to the price for a monopoly firm. State true or false.

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