4.6 - marginal, average and total costs

Question 1

What is total revenue?

Answer 1

all the money received by a firm from selling output

Question 2

What is average revenue?

Answer 2

total revenue / output

Question 3

What is marginal revenue?

Answer 3

addition to total revenue resulting from the sale of one more unit of the product

Question 4

What happens when marginal is greater than average?

Answer 4

average rises

Question 5

What happens when marginal is less than average?

Answer 5

average falls

Question 6

What happens when marginal equals average?

Answer 6

constante

Question 7

What are the conditions for perfect competition?

Answer 7

• large number of buyers and sellers
• perfect market info
• ability to buy/sell as much as desired at price
• individuals cannot influence the market price
• uniform product
• no barriers to entry in long run