Want this question answered?
Under Perfect Competition the demand curve is perfectly elastic. I don't know if that helps but it might
The marginal revenue curve describes the incremental change in revenue (that is, price*units sold). The MR is not always equivalent to its demand curve. The more perfect competition is, the closer demand approaches the MR. This is because, in perfect competition, firms sell at the MC = MR = P criterion. In the opposite case, monopoly, MR always lies under of demand, and firms achieve monopoly profits by choosing a production quantity where MC = MR and charging a price mark-up.
If the Demand Curve is separate from the MR=P curve, the company can not be of Perfect Competition. It can exist in any other market structure: Monopolistic Competition, Monopoly, or Imperfect Competition. In each of these three structures, the Demand Curve will always fall twice as fast as the MP=P=AR Curve. To answer your question in these terms, the company can have a downward sloping Demand Curve separate from the MR=P curve if it is not in the PC Market Structure.
AnswerFor a perfectly competitive firm with no market control, the marginal revenue curve is a horizontal line. Because a perfectly competitive firm is a price taker and faces a horizontal demand curve, its marginal revenue curve is also horizontal and coincides with its average revenue (and demand) curve. Yes - what you must remember is that a firm's demand curve in perfect competition is its average revenue curve. Average revenue = price x quantity / quantity = price. The demand curve shows the quantity demanded at varying prices and this is exactly what the average revenue curve will do.Because there are so many sellers in the market, no one firm has enough market power to influence price (if a firm tried to raise price consumers would move to different suppliers; nobody would buy the good), therefore price is determined by industry supply and demand, and a firm can produce any quantity at this price . This means that the firm faces a horizontal average revenue (demand curve) and if average revenue is constant, this means total revenue is increasing at a constant rate, and therefore marginal revenue is constant as well.
marginal revenue always lies behind the demand curve,and when demand increases marginal revenue also increases.demand curve is used to determine price of a commodity.
Under Perfect Competition the demand curve is perfectly elastic. I don't know if that helps but it might
The marginal revenue curve describes the incremental change in revenue (that is, price*units sold). The MR is not always equivalent to its demand curve. The more perfect competition is, the closer demand approaches the MR. This is because, in perfect competition, firms sell at the MC = MR = P criterion. In the opposite case, monopoly, MR always lies under of demand, and firms achieve monopoly profits by choosing a production quantity where MC = MR and charging a price mark-up.
If the Demand Curve is separate from the MR=P curve, the company can not be of Perfect Competition. It can exist in any other market structure: Monopolistic Competition, Monopoly, or Imperfect Competition. In each of these three structures, the Demand Curve will always fall twice as fast as the MP=P=AR Curve. To answer your question in these terms, the company can have a downward sloping Demand Curve separate from the MR=P curve if it is not in the PC Market Structure.
AnswerFor a perfectly competitive firm with no market control, the marginal revenue curve is a horizontal line. Because a perfectly competitive firm is a price taker and faces a horizontal demand curve, its marginal revenue curve is also horizontal and coincides with its average revenue (and demand) curve. Yes - what you must remember is that a firm's demand curve in perfect competition is its average revenue curve. Average revenue = price x quantity / quantity = price. The demand curve shows the quantity demanded at varying prices and this is exactly what the average revenue curve will do.Because there are so many sellers in the market, no one firm has enough market power to influence price (if a firm tried to raise price consumers would move to different suppliers; nobody would buy the good), therefore price is determined by industry supply and demand, and a firm can produce any quantity at this price . This means that the firm faces a horizontal average revenue (demand curve) and if average revenue is constant, this means total revenue is increasing at a constant rate, and therefore marginal revenue is constant as well.
marginal revenue always lies behind the demand curve,and when demand increases marginal revenue also increases.demand curve is used to determine price of a commodity.
because each additional good sold bring in a constant amount of total revenue
Demand curve will be perfect inelastic
Average revenue curve
Profit maximization occurs when the firm produces /sets their price at the intersection of the marginal cost curve and the horizontal MR DARP curve (marginal revenue, demand, average revenue, price)
Average revenue (AR): total revenue per unit of a product sold; Total revenue (TR): total number of dollars received by a firm or firm from the sale of a product; Marginal revenue (MR):additional revenue received result from the sale of an extra unit of product; Under perfect competition P=AR=MR and the firm's demand curve is flat.
Regard the "move-up"s of the whole industry's demand curve as a "dynamic process" at different times. When it happens to intersect with supply curve under perfect competition, we get the equilibrium price and quantity. At this time, firms seem like find their best "time" in the "dynamic process". So during this "time", the price for firms is perfect elastic because neither consumers would buy the product at a higher price nor firms would sell the product at a lower price. To sum up, the difference is -- the firm has a horizontal demand curve while the industry has a down-slope one under perfect competition.
The demand curve would be perfectly elastic.