### Marginal Revenue in a Competitive Market**Understanding Marginal Revenue (MR)****Kim:** In class, we learned about marginal revenue (MR). Marginal revenue is the additional revenue received from selling one more unit.**Question to Consider:** James, you sell your corn in a perfectly competitive market with an equilibrium price of $4.00. What is true about your marginal revenue?**Possible Answers:**1. **Option 1:** My marginal revenue is constant and equal to $4.00. For each bushel of corn I sell, I earn $4.00 in additional revenue. 2. **Option 2:** My marginal revenue for the first bushel of corn is $4.00 and then increases as I sell more and more bushels. 3. **Option 3:** My marginal revenue for the first bushel of corn is $4.00 and then decreases as I sell more and more bushels.### Graph Explanation: Market for Corn: High PriceOn the right side, we have a graph titled "Corn Market: High Price," illustrating the supply and demand for corn.**Graph Details:**- **X-Axis (Quantity in millions):** Measures the quantity of corn sold, ranging from 0 to 110 million bushels.- **Y-Axis (Price in dollars):** Measures the price per bushel of corn, ranging from $0.00 to $8.00. **Supply Curve (Blue Line):** - Starts at the bottom left and slopes upward to the right. This signifies that as the price increases, the quantity supplied also increases.**Demand Curve (Red Line):** - Starts at the top left and slopes downward to the right. This indicates that as the price decreases, the quantity demanded increases.**Equilibrium Point:**- The intersection of the supply and demand curves is the equilibrium point where the quantity supplied equals the quantity demanded. In this scenario, the equilibrium price is $4.00.### Correct Answer:In a perfectly competitive market, the marginal revenue remains constant and equal to the equilibrium price. Therefore, the accurate statement is:**Option 1:** My marginal revenue is constant and equal to $4.00. For each bushel of corn I sell, I earn $4.00 in additional revenue.**Interactive Element:**If applicable, students can select the correct answer and submit their response by clicking

Marginal revenue= (change in total revenue / change in quantity demanded)

revenue (MR). Marginal revenue is High Price the additional revenue received from selling one more unit. Kim Corn Market: High Price Market for Corn: High Price 8.00 James, you sell your corn in a perfectly competitive market with an equilibrium price of $4.00. What is true about your marginal 7.00 6.00 Kim 5.00 revenue? 4.00 3.00 2.00 1.00 0.00 10 20 30 40 50 60 70 80 90 100 110 Quantity (in millons) marginal revenue is constant and equal to $4.00. each bushel of corn I sell, I earn $4.00 in additional enue. marginal revenue for the first bushel of corn is 0 and then increases as I sell more and more mels. narginal revenue for the first bushel of corn is O and then decreases as I sell more and more els. Submit

revenue (MR). Marginal revenue is High Price the additional revenue received from selling one more unit. Kim Corn Market: High Price Market for Corn: High Price 8.00 James, you sell your corn in a perfectly competitive market with an equilibrium price of $4.00. What is true about your marginal 7.00 6.00 Kim 5.00 revenue? 4.00 3.00 2.00 1.00 0.00 10 20 30 40 50 60 70 80 90 100 110 Quantity (in millons) marginal revenue is constant and equal to $4.00. each bushel of corn I sell, I earn $4.00 in additional enue. marginal revenue for the first bushel of corn is 0 and then increases as I sell more and more mels. narginal revenue for the first bushel of corn is O and then decreases as I sell more and more els. Submit

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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