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A perfectly competitive firm faces a market price of ₹ 2 per unit. If it sells 8 units and then sells one more unit at the same price, by how much does its total revenue rise from the 9th unit?
A₹ 4
B₹ 2
C₹ 8
D₹ 9
Answer & Solution
Correct answer: B. ₹ 2
1. A perfectly competitive firm is a price taker, so every unit sells at the same market price.
2. Marginal revenue is the addition to total revenue from selling one more unit.
3. When price is fixed, MR equals price, so the 9th unit adds exactly the price to TR.
4. Here price is ₹ 2, therefore MR = ₹ 2.
_Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 4 Unit III "Price-Output Determination under Different Market Forms", p.3_
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