answersLogoWhite

0

What else can I help you with?

Continue Learning about Economics

Why does demand equal marginal revenue in perfect competition?

In perfect competition, demand equals marginal revenue because firms in this market structure are price takers, meaning they have no control over the price of their product. As a result, they must sell their goods at the market price, which is also their marginal revenue.


Why is price per unit equal to the average revenue and marginal revenue of a firm under perfect competition?

Under Perfect competition , Marginal revenue is constant and equal to the prevailing market price, since all units are sold at the same price. Thus in pure competition MR = AR = P.


How can one determine the method for calculating marginal revenue in perfect competition?

To determine the method for calculating marginal revenue in perfect competition, one can use the formula MR P(1 1/n), where MR is marginal revenue, P is price, and n is the number of units sold. This formula helps to understand how changes in quantity sold affect revenue in a perfectly competitive market.


Why do the demand and marginal revenue curves coincide?

Because in Pure Competition, Demand equals Price, and Price equals Marginal Revenue;hence, Demand equals Marginal revenue.


Why is it that firms can earn profits in the long run in monopoly and oligopoly but not in monopolistic competition and perfect competition?

Because monopolistically competitive firms have an optimal production allocation at monopoly values: marginal revenue = marginal cost, marking-up to the demand function. When competition is not perfect, marginal revenue does not equal demand but is always below it on a Cartesian plane, so the optimal production value of a monopolistically competitive firm is both less and at a higher price than a perfectly competitive one.

Related Questions

Why does demand equal marginal revenue in perfect competition?

In perfect competition, demand equals marginal revenue because firms in this market structure are price takers, meaning they have no control over the price of their product. As a result, they must sell their goods at the market price, which is also their marginal revenue.


Why is price per unit equal to the average revenue and marginal revenue of a firm under perfect competition?

Under Perfect competition , Marginal revenue is constant and equal to the prevailing market price, since all units are sold at the same price. Thus in pure competition MR = AR = P.


How can one determine the method for calculating marginal revenue in perfect competition?

To determine the method for calculating marginal revenue in perfect competition, one can use the formula MR P(1 1/n), where MR is marginal revenue, P is price, and n is the number of units sold. This formula helps to understand how changes in quantity sold affect revenue in a perfectly competitive market.


Why do the demand and marginal revenue curves coincide?

Because in Pure Competition, Demand equals Price, and Price equals Marginal Revenue;hence, Demand equals Marginal revenue.


Why is it that firms can earn profits in the long run in monopoly and oligopoly but not in monopolistic competition and perfect competition?

Because monopolistically competitive firms have an optimal production allocation at monopoly values: marginal revenue = marginal cost, marking-up to the demand function. When competition is not perfect, marginal revenue does not equal demand but is always below it on a Cartesian plane, so the optimal production value of a monopolistically competitive firm is both less and at a higher price than a perfectly competitive one.


Is marginal revenue the same at all levels of output in a perfect competition?

see the second & third link of this website: all-investing-money.co.cchope you get answer; good luck !


Is -5 marginal revenue positive negative or zero?

A wild guess is that it is negative.


Can marginal revenue ever be negative?

no,marginal revenue cannot be ever negative.this condition is only applies when price effect is on the revenue is greater than output effect


What is the relationship between price elasticity of demand and the monopolist's revenue?

marginal revenue is negative where demand is inelastic


How are price and output determined under pure or perfect competition?

Price is determined by the market and Output level is the only choice the firm has to make. Since firms want to maximise profit, it will produce at a level where Marginal Cost equals Marginal Revenue. This is the profit maximisation pointUnder the perfect competition sellers will reduce prices in order to sell more than their competitors.


How are price and output determined under pure and perfect competition?

Price is determined by the market and Output level is the only choice the firm has to make. Since firms want to maximise profit, it will produce at a level where Marginal Cost equals Marginal Revenue. This is the profit maximisation pointUnder the perfect competition sellers will reduce prices in order to sell more than their competitors.


What is the marginal revenue of a monopolist is?

The marginal revenue of a monopolist is the additional revenue generated from selling one more unit of a good or service. Unlike in perfect competition, a monopolist faces a downward-sloping demand curve, which means that to sell more units, it must lower the price on all units sold. As a result, marginal revenue is less than the price at which the additional unit is sold. This relationship is key to understanding a monopolist's pricing and output decisions.