Question

In perfect competition, which curve represents price line?
(a) AR = MR
(b) AR > MR
(c) TR
(d) None of these

Answer 1

b .................

........

Answer 2

Answer:

Question :

In Perfect Competition, which curve represents price line ?

Answer :

a) AR = MR

Price Line :

The line that shows the relation between output and price is known as Price Line. In perfect Competitive Market, the output of a firm does not depend on Price.

Average Revenue :

Total Revenue per unit of output is called Average Revenue. It is calculated by dividing TR by quantity of Output sold.

AR = TR / q = p × q / q = p

where,

• TR = Total Revenue

• q = quantity

• p = price of the commodity

AR is equal to Price. ie, Price Line and AR curve are same

Marginal Revenue :

Marginal Revenue is the addition to the total revenue when an additional unit of output is sold.

MR = ∆TR / ∆q OR MR = TRn - TR n-1

where,

• n is the no.of units of output sold.

At any level of output MR and market price are equal.