Asked by Vanessa Recamadas on Jul 16, 2024
Verified
Suppose a firm in a competitive market earned $2,000 in total revenue and had a marginal revenue of $20 for the last unit produced and sold. What is the average revenue per unit, and how many units were sold?
A) $5 and 50 units
B) $5 and 100 units
C) $100 and 20 units
D) $20 and 100 units
Average Revenue
The amount of revenue a company receives per unit of output sold, calculated by dividing total revenue by the quantity of goods or services sold.
Marginal Revenue
Additional income received from selling one more unit of a product or service.
Total Revenue
The total amount of money a firm receives from its sales of goods or services, calculated by multiplying the price per unit by the number of units sold.
- Differentiate the terms average revenue, marginal gain, and their importance for companies with a focus on amplifying profits.
- Compute and interpret average and marginal revenue from given data.
Verified Answer
JN
Jamie NightlingerJul 20, 2024
Final Answer :
D
Explanation :
In a competitive market, marginal revenue equals average revenue. Therefore, the average revenue per unit is $20. To find the number of units sold, divide total revenue ($2,000) by the average revenue per unit ($20), which equals 100 units.
Learning Objectives
- Differentiate the terms average revenue, marginal gain, and their importance for companies with a focus on amplifying profits.
- Compute and interpret average and marginal revenue from given data.