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
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
icon
Related questions
Question
100%
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.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Highway Construction
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:
9780190931919
Author:
NEWNAN
Publisher:
Oxford University Press
Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education