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Provision-Based Approach

Suppose the p...

Question

Suppose the price of a commodity determined in a competitive market is Rs. 5, then the marginal revenue of the 4th unit sold would be __________.
Outputs (Units): 1 2 3
AR(Rs.): 10 8 6

A

Rs. 20

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B

Rs.15

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C

Rs. 10

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D

Rs.5

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Solution

The correct option is D Rs.5
In a perfectly competitive market structure, P (AR) = MR
Thus, the marginal revenue of any unit sold will be equal to 5, which is the price.

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