If a business in a perfectly competitive industry is confronted with an equilibrium price of $5, its marginal revenue:Multiple Choicewill also be $5will be negativewill be greater than $5will be less than $5, but a positive numbermay be either greater or less than $5
Question
If a business in a perfectly competitive industry is confronted with an equilibrium price of 5will be negativewill be greater than 5, but a positive numbermay be either greater or less than $5
Solution
In a perfectly competitive market, the marginal revenue a firm receives from selling an additional unit of a good is equal to the market price of that good. This is because in perfect competition, firms are price takers, meaning they have no control over the price of the product they sell - it is determined by market supply and demand. Therefore, if a business in a perfectly competitive industry is confronted with an equilibrium price of 5.
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