MR Curve = AR = Demand Curve is a feature of which kind of Market?
a) Perfect Competition
b) Monopoly
c) Monopolistic
d) Oligopoly
Answers
Answer:
perfect competition is correct
Answer:
(a) MR Curve = AR = Demand Curve is a feature of Perfect Competition.
Explanation:
Perfect competition occurs when all enterprises sell the same products, market share has no influence on pricing, there is no price discrimination, companies can enter and exit without barriers, purchasers have perfect or complete information, and companies cannot set prices.
Because all commodities in the market are sold at a single (i.e. same) price, MR = AR. The industry sets the price, and the firm accepts it. Every company must accept the price set by the market. At this pricing, a company can sell as much of its product as it wants.
Clearly, as more units of the product are sold, additional revenue (i.e. MR) and average revenue (AR) will equal the Price.
As a result, AR = MR in perfect competition.