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Question

Average revenue is the same as market price of the commodity. Comment on this statement.

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Solution

Yes, we know that.
AR=TR/Q

We also know that,
TR=P×Q
(where P= Price and Q= Quantity or output sold)
Relating the two equations, we can write that
AR=TR/Q=(P×Q)/Q=P

Hence, firm's average revenue means price of the product corresponding to a given level of output. Or, AR=
Price

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