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Question

When a firm is able to sell more quantity of output at the same price, then:

A
AR > MR
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B
AR = MR
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C
AR < MR
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D
None of the above
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Solution

The correct option is C AR = MR
In perfectly competitive market any quantity can be demanded at the given price level.When a firm is able to sell more quantity of output at the same price, then AR=MR. Price line is the same as both firm's MR curve and firm's AR curve under the perfect competition.

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