Price equals average revenue at the profit-maximizing quantity of output.

Question

Quizplus · Accepted Answer

This is because at the profit-maximizing quantity of output, the marginal cost equals the marginal revenue, which is equal to the price in a perfectly competitive market. Therefore, the price equals the average revenue at this quantity. This statement is true according to the profit-maximizing rule in microeconomics, which states that firms should produce at the quantity where marginal revenue equals marginal cost. At this quantity, the price equals the average revenue (or the revenue per unit sold), so the statement is true.

Price Equals Average Revenue at the Profit-Maximizing Quantity of Output