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Question
In which market form are average revenue and marginal revenue of a firm always equal?
In which market form are average revenue and marginal revenue of a firm always equal?
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Solution
Under perfect competition, average revenue and marginal revenue of a firm are always equal.In case of perfect competition,
a) a firm is able to charge uniform priceb) a firm is able to sell any amount at the prevailing priceFirm's demand curve under perfect competition is a horizontal straight line parallel to X-axis.Under perfect competition, AR is constant for a firm. Hence, AR = MR.
a) a firm is able to charge uniform price
b) a firm is able to sell any amount at the prevailing price
Firm's demand curve under perfect competition is a horizontal straight line parallel to X-axis.Under perfect competition, AR is constant for a firm. Hence, AR = MR.
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