When a perfectly competitive firm produces eight units of output, it receives to

Question

When a perfectly competitive firm produces eight units of output, it receives total revenue of dollar 200. The price per unit is smallcircle dollar 25. smallcircle less than dollar 25. smallcircle somewhere between dollar 25 and dollar 30. At paula's Pizza, the marginal revenue of the last pizza produced is dollar 12. The marginal cost of the last pizza produced is dollar 10. In order to increase profits, Paula should smallcircle increase output. smallcircle decrease output. smallcircle not cahnge output smallcircle offer a different variety of pizza.

Explanation / Answer

(3) Option (a)

Price = Total revenue / Quantity = $200 / 8 = $25

(4) Option (a)

Since marginal revenue is higher than marginal cost, there are marginal profits, so total profit will be maximized by increasing output.

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