Chapter 57, Problem 2FRQ

a)

To determine

A graph for a perfectly competitive firm’s demand curve if the market price is $10

Explanation of Solution

Graph for a perfectly competitive firm’s demand curve if the market price is $10:

  

Economics Concept Introduction

Introduction: Perfect competition is the market structure which exhibits the characteristic of price takers. All firms in the perfectly competitive industry sells the same or identical product and market share of the firm cannot affect price.

b)

To determine

The firm’s marginal revenue equals any time it sells one more unit of its output

Explanation of Solution

The marginal revenue curve of the firm would be same as the firm's demand curve and when consumer demands an extra unit of good, the firm would sell one additional unit and the revenue of the firm will goes up in the same proportion that equal to market price.

Economics Concept Introduction

Introduction: Marginal revenue is the benefit or revenue that a firm incurs by selling an additional unit of the good.