alleryStart learning →How is marginal revenue defined in the source?
AThe additional revenue gained from selling one more unit
BThe total revenue earned from all units sold
CThe average revenue per unit across all output levels
DThe additional cost of producing one more unit
Answer & Solution
Correct answer: A. The additional revenue gained from selling one more unit
1. Marginal revenue is defined against a single additional unit of output, not the total or the average.
2. It is the additional revenue a firm gains from selling that one more unit.
3. Total revenue across all units sold is a different, broader concept than marginal revenue.
4. The additional cost of producing one more unit is marginal cost, a separate concept from marginal revenue.
_Source: OpenStax Principles of Microeconomics for AP Courses (CC BY 4.0), Ch 8 "Perfect Competition", section 8.2 | How Perfectly Competitive Firms Make Output Decisions_
Keep practising Perfect Competition
Browse all Perfect Competition questions for AP Microeconomics, or explore more Economics topics.
Related questions
Catch the false claim about price takersHow does the source define allocative efficiency in a perfectly competitive market?The source defines 'exit' as which process?The source defines 'entry' as which process?For a perfectly competitive firm, marginal revenue equals what?The short run for a perfectly competitive firm. What defines this period?