For a perfect competitor, price equals

Question

Quizplus · Accepted Answer

In a perfectly competitive market, each producer sells an identical product and has no ability to influence the market price. This means that the demand curve faced by the producer is perfectly elastic, and the price that they can sell their product for is equal to both the average revenue (which is simply equal to the price) and the marginal revenue (which is equal to the price as well, since increasing output by one unit in a perfectly competitive market leads to an increase in revenue that is equal to the market price). Therefore, price equals both average revenue and marginal revenue in a perfectly competitive market.

For a Perfect Competitor, Price Equals