A firm operating in a perfectly competitive market sells its product at a constant price o… — JAMB UTME

A firm operating in a perfectly competitive market sells its product at a constant price of $P = \$30$ . The firm's short-run marginal cost function is given by $MC = 2Q + 10$ , where $Q$ is the quantity produced. Assuming the firm maximizes profit, what is the total revenue earned by the firm at equilibrium?

$\$300$ Cevap
B
$\$150$
C
$\$200$
D
$\$600$

Cevap

\$300

In perfect competition, the firm is a price taker, so price equals marginal revenue (

P = MR = \$30

). Setting

MR = MC

gives

30 = 2Q + 10

, which solves to

Q = 10

units. Multiplying output by the price yields total revenue of

\$300

Adım Adım Çözüm

Determine Marginal Revenue (MR)

MR = P = \$30

In a perfectly competitive market, price is constant and equal to marginal revenue.

Set profit-maximization condition MR = MC to solve for equilibrium quantity (Q)

30 = 2Q + 10 \Rightarrow 2Q = 20 \Rightarrow Q = 10

units

Profit is maximized where marginal revenue equals marginal cost.

Calculate Total Revenue (TR)

TR = P \times Q = \$30 \times 10 = \$300

Total revenue is the product of market price and equilibrium output.

Anahtar Kavram

Short-run Profit Maximization under Perfect Competition

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