A firm is able to sell any quantity of a good at a given price. The firm's marginal revenue will be : (Choose the correct alternative):
(a) Greater than Average Revenue
(b) Less than Average Revenue
(c) Equal to Average Revenue
The correct option is (c). Marginal revenue is the change in total revenue when one more unit of a good is sold. Assume that a firm sells any level of quantity of output at a given price, we can find that the firm’s Marginal revenue = Average Revenue.
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- Total, Average and Marginal Revenue