the unit price of a commodity does not depend on the quantity of the good purchased, then Group of answer choicesmarginal revenue will never be constant.marginal revenue will equal average revenue.marginal revenue will be zero.total revenue will be constant.
Question
the unit price of a commodity does not depend on the quantity of the good purchased, then Group of answer choicesmarginal revenue will never be constant.marginal revenue will equal average revenue.marginal revenue will be zero.total revenue will be constant.
Solution
The correct answer is: marginal revenue will equal average revenue.
Here's why:
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The unit price of a commodity is the price for one unit of that good. If it does not depend on the quantity of the good purchased, it means the price is constant regardless of how many units are bought.
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Marginal revenue is the additional revenue that a firm receives from selling one more unit of a good. If the unit price is constant, then each additional unit sold will bring in the same amount of revenue, making the marginal revenue constant.
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Average revenue is the total revenue divided by the quantity of the good sold. If the unit price is constant, then the total revenue will increase linearly with the quantity sold, meaning the average revenue (total revenue/quantity) will also be constant and equal to the unit price.
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Therefore, in this case, the marginal revenue (the revenue from selling one more unit) will equal the average revenue (the total revenue per unit sold).
Similar Questions
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