Question

13. Suppose a firm in a competitive market produces and sells 80 units of output and has a marginal revenue of $8. What would be the firm's total revenue if it instead produced and sold 60 units of output?
A. $60 B. $80
C. $240 D. $480
E. $640

14. Hazy Days Farms sells wheat to a grain dealer. Because the market for wheat is generally considered to be competitive, Hazy Days Farm does not
A. have any fixed costs of production.
B. have any variable costs of production.
C. choose the quantity of wheat to produce.
D. set marginal revenue equal to marginal cost to maximize profit.
E. choose the price at which it sells its wheat.

15. If the firm’s marginal cost is equal to its marginal revenue at the firm’s existing level of production, then the firm should
A. maintain its current level of production to maximize profit.
B. advertise to find additional buyers.
C. decrease production to maximize profit.
D. increase production to maximize profit.
E. B and D, only

Answer 1

Answer- 13 The correct option is D.) $480

Under perfectly competitive market P= MR= $8

Q= 60

Total Revenue= P*Q

                     = 8*60

                     = $480

Answer-14 The correct option is E.) choose the price at which it sells its wheat.

Hazy Days Farms sells wheat to a grain dealer. Because the market for wheat is generally considered to be competitive, Hazy Days Farm does not choose the price at which it sells its wheat. It is because, In perfect competition firms are price takers. They merely take the price given by industry.

Answer-15 The correct option is A.)maintain its current level of production to maximize profit.

If the firm’s marginal cost is equal to its marginal revenue at the firm’s existing level of production, then the firm should maintain its current level of production to maximize profit. Its the profit-maximizing condition where MR=MC.