A perfectly competitive firm with a random demand has an expected marginal revenue that is its expected price.

Question

Quizplus · Accepted Answer

In perfect competition, the firm is a price taker, which means it has no control over the price of the product it sells. The price is determined by the market forces of supply and demand. Therefore, the firm's marginal revenue (MR) is equal to the market price. If the demand is random, the expected MR will also be equal to the expected price.

A Perfectly Competitive Firm with a Random Demand Has an Expected