B

Question 1

Calculate Total Revenue

Answer 1

“Price times quantity (P × Q), or the sum of individual units sold times
their respective prices; ∑(Pi × Qi)”

Question 2

Interpret Total Revenue

Answer 2

Perfect Comp TR: TR is ‘constant’; TR increases by the price level

Question 3

Calculate Average Revenue

Answer 3

“Total revenue divided by quantity; (TR ÷ Q)”

Question 4

Interpret Average Revenue

Answer 4

The price that the firm receives in the markets for selling a given quantity

If firm sells at a COMPETITIVE price, then AR = PRICE

Question 5

Calculate Marginal Revenue

Answer 5

“Change in total revenue divided by change in quantity; (ΔTR ÷ ΔQ)”

Question 6

Interpret Marginal Revenue

Answer 6

The additional revenue from selling one more unit

Competitive market: MR = AR, where both are the same at market price

Question 7

Compare Total, Average, and Marginal Revenue

Answer 7

Perfect Comp: TR = AR = MR = P unless market demand supply factors pivot TR toward Y (steeper) or x (flatter)

Imperfect Comp: TR is greatest when MR = 0
P = AR = Demand

Question 8

Competitive Market

Answer 8

Price is constant to the firm regardless of the amount of output offered

Question 9

Horizontal Demand Curve

Answer 9

Denotes perfect comp, indicates that price is fixed and the curve is horizontal at the price point where the market sets the price.