Farmer Brown produces corn in a perfectly competitive market. Farmer Brown produces and sells 500 bushels of corn. The market supply and demand curves are illustrated in the above figure
a. What is Farmer Brown's total revenue?
b. What is Farmer Brown's marginal revenue?
a. Total revenue = price × quantity. The price is determined by the intersection of the demand and supply curves, $6 a bushel. As a result, Farmer Brown's total revenue is $6 × 500 = $3,000.
b. For a perfectly competitive firm, the marginal revenue equals the price, so Farmer Brown's marginal revenue is $6.
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