What is the behavior of average revenue in a market in which a firm can sell any quantity of a good at a given price?

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Solution

The market form as implied above is 'perfect competition'. This can be derived from the above line 'a firm can sell any quantity of a good but at a given price'. As we know, a perfect competitive firm is a price taker and not a price maker. In this market form, the average revenue curve is a straight line parallel to the horizontal axis (or output axis).

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