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Why is price per unit equal to the average revenue and marginal revenue of a firm under perfect competition?
Wiki User
∙ 11y ago
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.
Wiki User
∙ 11y ago
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Can marginal revenue be negative in a perfect competition?
no
What is the meaning of average revenue and marginal revenue?
what is average revenue?
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 do average revenue rise under perfect competitive market?
In perfect competition prices are fixed, Average revenue is also same for all units of goods.
Why average revanue is equal to marginal revanue in imperfect competiton?
Average Revenue (AR) is equals to Marginal Revenue (MR) in Perfect competition (PC) not imperfect competition. AR can be derived from the formula= Total revenue(TR) / Quantity. Since TR = Price x Quantity, the formula now will be Price x Quantity/ Quantity and naturally, AR equals to Price. Marginal Revenue can be measured by the formula= Change in total revenue/ Change in quantity (which is 1). Since the change in total revenue will be equals to the price of the product, MR in this case will be the Price of the product. From here we can see that Price = MR = AR = Demand.
Can marginal revenue be negative in a perfect competition?
no
What is the meaning of average revenue and marginal revenue?
what is average revenue?
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 do average revenue rise under perfect competitive market?
In perfect competition prices are fixed, Average revenue is also same for all units of goods.
Why average revanue is equal to marginal revanue in imperfect competiton?
Average Revenue (AR) is equals to Marginal Revenue (MR) in Perfect competition (PC) not imperfect competition. AR can be derived from the formula= Total revenue(TR) / Quantity. Since TR = Price x Quantity, the formula now will be Price x Quantity/ Quantity and naturally, AR equals to Price. Marginal Revenue can be measured by the formula= Change in total revenue/ Change in quantity (which is 1). Since the change in total revenue will be equals to the price of the product, MR in this case will be the Price of the product. From here we can see that Price = MR = AR = Demand.
How does a monopolistically competitive firm determine its profit-maximizing price?
price = marginal revenue. marginal revenue > average revenue. price > marginal cost. total revenue > marginal co
Marginal revenue curve?
Explain why the marginal revenue(MR) is always less than the average revenue (AR)?
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.
Profit maxiamisation in a perfect economy?
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)
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 !
What is the Concept of revenue?
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.
Under perfect competition is average revenue curve elastic or inelastic?
Under Perfect Competition the demand curve is perfectly elastic. I don't know if that helps but it might
