Farmer Brown produces corn in a perfectly competitive market. Farmer Brown produces and sells 500 bushels of corn. The market supply and demand curves are illustrated in the above figure
a. What is Farmer Brown's total revenue?
b. What is Farmer Brown's marginal revenue?
a. Total revenue = price × quantity. The price is determined by the intersection of the demand and supply curves, $6 a bushel. As a result, Farmer Brown's total revenue is $6 × 500 = $3,000.
b. For a perfectly competitive firm, the marginal revenue equals the price, so Farmer Brown's marginal revenue is $6.
You might also like to view...
According to monetarists,
a. businesses and households are the primary source of instability in the economy. b. the Federal Reserve causes instability in the economy primarily by allowing instability in the money demand that determines the level of economic activity. c. the government can stabilize the economy by interfering with the normal misadjustment mechanisms in the private sector. d. All of the above e. None of the above
Define the following terms:
a. Human capital b. Investment c. Capital formation d. Property rights