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Question
A perfectly competitive firms demand curve is one where ___________.
A perfectly competitive firms demand curve is one where ___________.
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Solution
The correct option is C AR=MR
In a perfectly competitive market structure, the individual firms are price takers, the supply curve shows the amount the firm is willing to supply at a particular price. The firm need not reduce the price to sell more, it also implies that if the firm would not be able to sell at a higher price. Thus, the additional revenue earned (MR) is always the same and equal to price.
In a perfectly competitive market structure, the individual firms are price takers, the supply curve shows the amount the firm is willing to supply at a particular price. The firm need not reduce the price to sell more, it also implies that if the firm would not be able to sell at a higher price. Thus, the additional revenue earned (MR) is always the same and equal to price.
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