Question

AR, MR and TR when Price is not Constant

Answer 1

Answer:

When price remains same at all output levels (like in case of perfect competition), no firm is in a position to influence the market price of the product. A firm can sell more quantity of output at the same price (see Table 7.2). It means, the revenue from every additional unit (MR) is equal to AR. As a result, both AR and MR curves coincide in a horizontal straight line parallel to the X-axis.