Under conditions of perfect competition, marginal revenue and price are equal for the individual firm.

Question

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In perfect competition, there are many firms selling identical products, and no single firm has any control over the price. Therefore, the price is determined by the market demand and supply, and each firm in the industry faces a horizontal demand curve that is perfectly elastic. As a result, the marginal revenue for the individual firm is equal to the price of the product.

Under Conditions of Perfect Competition, Marginal Revenue and Price Are