Suppose that Joe sells pork in a purely competitive market. The market price of pork is $4 per pouund. Joes marginal revenue from selling the 21st pound of pork would be

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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A 21 lbs B $21 C $84 D $4
**Understanding Marginal Revenue in a Competitive Market**

**Scenario:**
Suppose that Joe sells pork in a purely competitive market. The market price of pork is $4 per pound. Joe’s marginal revenue from selling the 21st pound of pork would be...

**Analysis:**
To compute Joe’s marginal revenue in a purely competitive market, we need to understand the relationship between price and marginal revenue in such a market setting. In a purely competitive market, the price set by the market is constant and equal to the marginal revenue (MR).

Given:
- Market price (P) = $4 per pound

Since Joe is operating in a purely competitive market:
- The marginal revenue (MR) from selling the additional unit, which is the 21st pound, is equal to the market price.

**Conclusion:**
- Joe’s marginal revenue from selling the 21st pound of pork would be $4.

In purely competitive markets, businesses are price takers, meaning the price is determined by overall supply and demand in the market, and each additional unit sold increases revenue by the market price of the product.
Transcribed Image Text:**Understanding Marginal Revenue in a Competitive Market** **Scenario:** Suppose that Joe sells pork in a purely competitive market. The market price of pork is $4 per pound. Joe’s marginal revenue from selling the 21st pound of pork would be... **Analysis:** To compute Joe’s marginal revenue in a purely competitive market, we need to understand the relationship between price and marginal revenue in such a market setting. In a purely competitive market, the price set by the market is constant and equal to the marginal revenue (MR). Given: - Market price (P) = $4 per pound Since Joe is operating in a purely competitive market: - The marginal revenue (MR) from selling the additional unit, which is the 21st pound, is equal to the market price. **Conclusion:** - Joe’s marginal revenue from selling the 21st pound of pork would be $4. In purely competitive markets, businesses are price takers, meaning the price is determined by overall supply and demand in the market, and each additional unit sold increases revenue by the market price of the product.
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