The average revenue curve of a firm in perfect competition is __________.

U-shaped

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l-shaped

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Veritcal

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Horizontal

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Solution

The correct option is D Horizontal
The average revenue curve is horizontal under perfect competition.
The average revenue curve reflects the degree of market control held by a firm. For a perfectly competitive firm with no market control, the average revenue curve is a horizontal line.

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Draw the average revenue curve of a firm under (a) monopoly and (b) perfect competition. Explain the difference in these curves, if any.

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