Question

In a purely competitive market, price per unit to the purchaser is synonymous with _______ per unit or ________ revenue to a seller. (Enter one word per blank.)

Answer 1

In a purely competitive market, the price per unit to the purchaser is synonymous with revenue per unit or total revenue to a seller.

Step-by-step explanation:

In a purely competitive market, the price per unit to the purchaser is synonymous with revenue per unit or total revenue to a seller.

Since a perfectly competitive firm must accept the price for its output as determined by the product's market demand and supply, it cannot choose the price it charges. The firm faces a perfectly elastic demand curve for its product, meaning buyers are willing to buy any number of units at the market price.

For example, if a small farmer produces raspberries and sells them frozen for $4 per pack, sales of one pack of raspberries will bring in $4, two packs will be $8, three packs will be $12, and so on. If the price of frozen raspberries doubles to $8 per pack, then sales of one pack of raspberries will be $8, two packs will be $16, three packs will be $24, and so on.