Under which of the following market structures, AR of the firm will be equal…
2019
Under which of the following market structures, AR of the firm will be equal to MR?
- A.
Monopoly
- B.
Monopolistic competition
- C.
Oligopoly
- D.
Perfect competition
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Correct answer: D
Answer: In a perfectly competitive market the firm is a price taker, so Average Revenue (AR) equals Marginal Revenue (MR), and both equal the market price (P). Why AR = MR: AR = Total Revenue