Because for a perfectly competetive firm since the demand curve is perfectly elastic even a slightest price change doesnt add any further demand..so there is no change in marinal revenue also.Since revenue is demand multiplied with cost of unit..the two curves are same.
When Demand is perfectly elastic, Marginal Revenue is identical with price.
Demand = Price = Marginal Cost.
No it does not. Only Perfectly Competitive firms have a horizontal Marginal Cost curve, which is also there demand curve.
Yes, there is a relationship between the marginal revenue curve and the demand curve. For a monopolistic firm, the marginal revenue curve lies below the demand curve because the firm must lower the price on all units sold to sell additional units, resulting in diminishing marginal revenue. In contrast, for a perfectly competitive firm, the marginal revenue curve is horizontal and coincides with the demand curve, as the firm can sell any quantity at the market price without affecting it. Thus, while the two curves are related, their positions and shapes differ based on the market structure.
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.
When Demand is perfectly elastic, Marginal Revenue is identical with price.
Demand = Price = Marginal Cost.
No it does not. Only Perfectly Competitive firms have a horizontal Marginal Cost curve, which is also there demand curve.
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.
A monopoly produces at a point where marginal revenue equals marginal cost, they don't charge this price, but charge a higher price that corresponds with the demand they face. Therefore they produce less and charge more than a competitive firm that equates the price to marginal cost.
Because in Pure Competition, Demand equals Price, and Price equals Marginal Revenue;hence, Demand equals Marginal revenue.
The pure monopolist's market situation differs from that of a competitive firm in that the monopolist's demand curve is downsloping, causing the marginal-revenue curve to lie below the demand curve. Like the competitive seller, the pure monopolist will maximize profit by equating marginal revenue and marginal cost. Barriers to entry may permit a monopolist to acquire economic profit even in the long run.
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.
An increase in demand in a perfectly competitive market will lead to an increase in revenue for the business. The more they sell the more they will make.
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.
In the long run, the equilibrium price and quantity for a perfectly competitive firm are determined by factors such as production costs, market demand, and competition from other firms. The firm will adjust its output level until it reaches a point where marginal cost equals marginal revenue, resulting in an equilibrium price and quantity.
In a monopoly, demand does not equal marginal revenue because the monopoly firm has the power to set prices higher than the marginal revenue. This discrepancy occurs because the monopoly has control over the market and can influence prices to maximize profits, unlike in a competitive market where prices are determined by supply and demand forces.