Marking

2254 Words10 Pages
Top of Form
1 . Purely competitive firms increase total revenue by • A. increasing production • B. decreasing production • C. increasing price • D. decreasing price
Bottom of Form
Correct :
To increase revenue, firms look to increase price or quantity, as price multiplied by quantity equals total revenue. Purely competitive firms can sell as much as they want at the market price. Adding additional units of the product does not result in a change in the market price. Therefore, since purely competitive firms do not influence price, they increase total revenue by increasing quantity.

Materials • Profit-Maximizing Case
Top of Form
2 . What are two ways for a competitive firm to determine the optimal level of
…show more content…
It is profitable for a firm to continue employing additional resources as long as • A. Marginal Revenue Product >= Marginal Resource Cost • B. Marginal Revenue Product = Marginal cost • D. Marginal Revenue Product >= Price
Bottom of Form
Correct :
As with the optimal level of production for a good, the optimal usage of a resource is determined by ensuring that the revenue from that resource is at least equal to the marginal cost of that resource.

Materials • Rule for Employing Resources: MRP = MRC
Top of Form
5 . As additional units are produced, the marginal revenue product falls for all firms because marginal product decreases. For firms operating in industries that are not perfectly competitive, marginal revenue product also

More about Marking

Get Access