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Why is average revenue equal to price when all units of output are sold at the same price?
Average revenue is equal to price when all units of output are sold at the same price because average revenue is calculated by dividing total revenue by the quantity sold. In a scenario where each unit is sold at a uniform price, total revenue is simply the price multiplied by the number of units sold. Therefore, when you divide total revenue by the quantity, the result is the price per unit, making average revenue equal to price. This relationship holds true in perfectly competitive markets where firms are price takers.
What else can I help you with?
Which concept of revenue is called price?
Average revenue is nothing but the price of the product. Average revenue is the same as price of the commodity
Does the price equal the marginal revenue in a competitive market?
In a competitive market, the price does equal the marginal revenue.
Why is average revenue curve equal to the demand curve?
In normal demand curve, AR is equal to price and so it falls as output increases since the price has to be lowered in order to sell more products. based by: Jocelyn Blink, Ian Dorton, Economics Course companion, Oxford IB
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.
Is marginal revenue equal to price in a perfectly competitive market?
In a perfectly competitive market, marginal revenue is equal to price.
What is the meaning of shutdown point?
The shutdown point is the output level at which total revenue is equal to the total variable cost. Here the product price is also equal to its average variable cost.
Which concept of revenue is called price?
Average revenue is nothing but the price of the product. Average revenue is the same as price of the commodity
Are marginal revenue average revenue and price are all equal for a monopolist?
No, in a monopolistic market, marginal revenue is less than average revenue and price. This is because the monopolist must lower the price in order to sell more units, leading to a decline in revenue per unit.
Does the price equal the marginal revenue in a competitive market?
In a competitive market, the price does equal the marginal revenue.
Why is average revenue curve equal to the demand curve?
In normal demand curve, AR is equal to price and so it falls as output increases since the price has to be lowered in order to sell more products. based by: Jocelyn Blink, Ian Dorton, Economics Course companion, Oxford IB
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.
Is marginal revenue equal to price in a perfectly competitive market?
In a perfectly competitive market, marginal revenue is equal to price.
Is the price equal to marginal revenue in a perfectly competitive market?
In a perfectly competitive market, the price is equal to the marginal revenue.
Is marginal revenue equal to price in economics?
In economics, marginal revenue is not always equal to price. Marginal revenue is the additional revenue gained from selling one more unit of a product, while price is the amount customers pay for that product. In competitive markets, where firms are price takers, marginal revenue is equal to price. However, in markets with market power, such as monopolies, marginal revenue is less than price.
When can monopolist earn an economic profit?
A monopolist earns economic profit when the price charged is greater than their average total cost. To maximize profits, monopolies will produce at the output where marginal cost is equal to marginal revenue. To determine the price they will set, they choose the price on the demand curve that corresponds to this level of production.
WHY under perfect competition AR equals MR?
In a perfect competition, a firm can sell any amount of output at a given market price. It means firm's additional revenue(MR) from the sale of every additional unit of the commodity will be just equal to the market price (i.e. AR). Hence average revenue and marginal revenue become equal (AR=MR) and constant in that situation. Consequently the AR and MR curve will be same and would be horizontal or parallel to the x-axis.
In a monopoly why is the marginal revenue curve always below the demand curve?
because price and output are related by the demand function in a monopoly. it is the same thing to choose optimal price or to choose the optimal output. even though the monopolist is assumed to set price and consumers choose quantity as a function of price, we can think of the monopolist as choosing the optimal quantity it wants consumers to buy and then setting the corresponding price. OR in simpler terms Because AR (demand) is downward sloping - (see equi-marginal rule or Law of Equi-Marginal Utility). To sell one more unit of output, the firm must lower its price, meaning that the revenue received is less than that received for the previous unit (marginal revenue received for unit 2 is less than that for unit 1). Therefor the marginal revenue will be less than the average revenue. Unit 1 sold for $5 Marginal revenue=$5 Average Revenue=$5 Unit 2 sold for $4 Marginal revenue=$4 Average Revenue=$4.50 ($5+$4/2)
