Question

If a perfectly competitive firm has total revenue that is equal to $400 when it produces one hundred units, and if its total revenue rises to $404 when it produces one hundred and one units, the marginal revenue of the one hundred and first unit is: $404. $0.25. $4. $1.

Answer 1

Answer: $4

Step-by-step explanation:

GIVEN the following ;

Production of 100 units = Total revenue of $400

Production of 101 units = Total revenue of $404

Marginal revenue of 101st unit =?

By definition, The Marginal revenue could explained as the extra income received through the sale of more unit of a product. These extra or additional income received is the price paid for the one extra unit purchased.

Relating the explanation to the question above :

Additional income due to one additional unit of good produced:

100 to 101 = $400 to $404

Therefore,

Marginal revenue = $404 - $400

Marginal revenue = $4

Answer 2

$4

Step-by-step explanation:

Perfectly competitive firms are characterised by:

1) Free entry and exit of buyers and sellers.

2) Large number of buyers and sellers.

3) Existence of identical product.

4) Informations are readily available to the customers.

Marginal revenue(MR) refers to a change in revenue as a result of an additional change in output.

At 100 units output, MR=$400

At 101 units output, MR=$404

Change in MR=$404-$400

=$4

Change in output=101 units-100units

=1 unit

Marginal revenue(MR)= change in revenue/Change in output

Marginal revenue (MR)=$4/1 Unit

MR= $4