20.

Output

Total Revenue

Total Cost

0

$0

$50

1

40

74

2

80

94

3

120

117

4

160

142

5

200

172

The table gives data for a purely competitive firm. The marginal revenue from the third unit of output is

A. $40.
B. $50.
C. $120.
D. $160.

The table gives data for a purely competitive firm. The marginal revenue from the third unit of output is

Question

20.

Output

Total Revenue

Total Cost

0

$0

$50

1

40

74

2

80

94

3

120

117

4

160

142

5

200

172

The table gives data for a purely competitive firm. The marginal revenue from the third unit of output is

A.  $40.
B.  $50.
C.  $120.
D.  $160.

The table gives data for a purely competitive firm. The marginal revenue from the third unit of output is

BlackTom AI · Accepted Answer

Marginal revenue is defined as the change in total revenue from selling one additional unit of output. In perfect competition, marginal revenue equals the market price and is therefore constant across units.

1. Relevant knowledge points and concepts
- Total revenue (TR) = price × quantity; marginal revenue (MR) = ΔTR / ΔQ (the change in TR when Q increases by one unit).
- For a purely (perfectly) competitive firm, MR = price and MR is constant if price is constant.

2. Step-by-step reasoning
- Use the table values for total revenue at Q = 2 and Q = 3.
- Compute the change in total revenue when output increases from 2 to 3 units.

3. Calculations with intermediate steps
- TR at Q = 2 is $80.
- TR at Q = 3 is $120.
- ΔTR = TR(3) − TR(2) = $120 − $80 = $40.
- ΔQ = 1 unit, so MR for the third unit = ΔTR / ΔQ = $40 / 1 = $40.

4. Why the correct answer is correct
- The marginal revenue associated with producing the third unit equals the increase in total revenue when output rises from 2 to 3 units, which is $40. In a purely competitive market this also equals the constant market price per unit, confirming MR = $40.

5. Why the other options are incorrect
- B ($50): No change in TR of $50 occurs between consecutive quantities in the table, so MR is not $50.
- C ($120): This is total revenue at Q = 3, not the change in revenue from Q = 2 to Q = 3.
- D ($160): This is total revenue at Q = 4, not the marginal revenue of the third unit.

6. Conclusion confirming the final answer
- The marginal revenue from the third unit is $40, so the correct choice is A, which matches the provided answer.

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