Question

Suppose a firm in a competitive market produces and sells 8 units of output and has a marginal revenue of $8.00. What would be the firm's total revenue if it instead produced and sold 4 units of output?

a. $4
b. $8
c. $32
d. $64

Answer 1

option (c) $32

Step-by-step explanation:

Data provided in the question:

The firm is in a competitive market

Number of units produced = 8

Marginal revenue = $8.00

Number of units sold = 4 units of output

Now,

If a firm is in a competitive market, the horizontal demand curve i.e the price remains the constant

therefore,

The firm's total revenue will be = Number of units sold × Marginal revenue

= 4 × $8

= $32

Hence,

The correct answer is option (c) $32