Asked by Dawson Lewis on May 19, 2024
Verified
The demand curve facing a perfectly competitive firm is:
A) the same as its average revenue curve, but not the same as its marginal revenue curve.
B) the same as its average revenue curve and its marginal revenue curve.
C) the same as its marginal revenue curve, but not its average revenue curve.
D) not the same as either its marginal revenue curve or its average revenue curve.
E) not defined in terms of average or marginal revenue.
Demand Curve
A graphical representation of the quantity of a good or service demanded by consumers at various prices, typically downward sloping indicating an inverse relationship between price and quantity demanded.
Average Revenue Curve
A graphical representation showing how the average revenue per unit sold changes with changes in the quantity of the product sold.
Marginal Revenue Curve
A graphical representation showing the additional revenue a firm can earn by selling one more unit of a good or service.
- Comprehend the features and presuppositions associated with perfectly competitive markets.
Verified Answer
ES
elfimpz SubaruMay 24, 2024
Final Answer :
B
Explanation :
In a perfectly competitive market, the demand curve facing an individual firm is perfectly elastic, meaning that the firm can sell any quantity of its product at the prevailing market price. This results in the firm's average revenue (AR) and marginal revenue (MR) being equal to each other and to the price of the product, hence the demand curve is the same as both its average revenue curve and its marginal revenue curve.
Learning Objectives
- Comprehend the features and presuppositions associated with perfectly competitive markets.