In a competitive market, marginal revenue will only sometimes equal average revenue.

Question

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In a competitive market, firms are price takers and therefore the price, which is equal to the average revenue, becomes fixed. The marginal revenue curve will always lie below the average revenue curve, except for the point where the two curves intersect, which is the profit maximizing output level. Therefore, marginal revenue will not always equal average revenue in a competitive market.

In a Competitive Market, Marginal Revenue Will Only Sometimes Equal