Question

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

(d) Zero

Answer 1

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.