For a firm in a perfectly competitive market, price is
A)equal to both average revenue and marginal revenue.
B)equal to average revenue but greater than marginal revenue.
C)greater than marginal revenue but less than average revenue.
D)less than both average revenue and marginal revenue.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, a firm is a price taker and must accept the market price for its product. Therefore, the price is equal to both average revenue (AR) and marginal revenue (MR) because each additional unit sold brings in the same price. In other market structures, such as a monopoly, the price is greater than the marginal revenue because the monopolist must lower the price on all units to sell one additional unit.

For a Firm in a Perfectly Competitive Market, Price Is