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Under perfect competition, the average revenue, marginal revenue and price are shown:

A. By a same single curve

B. By three different curves

C. By downward sloping curve

D. None of the above

Correct Answer : A.


Under perfect competition the demand curve ( AR curve) which an individual seller has to face is perfectly elastic and parallel to xaxis .The individual producer is unable to effect the market price and so he is a price taker. He supplies the unlimited quantity of product at prevailing price. Hence MR equals the price of the product and AR is also equal to MR. So MR = AR = P. These three curves are coincide and always shown by a single curve which is perfectly elastic and parallel to the x-axis.}

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