MENU
Question -

What is the relation between market price and average revenue of a price taking firm (i.e. perfectly competitive firm)?



Answer -

The average revenue (AR) of a firm is defined as total revenue per unit of output sold. Let a firm’s output be Q and the market price be P, then TR equals P x Q. Hence,

In other words, for a price-taking firm, average revenue equals the market price.

Comment(S)

Show all Coment

Leave a Comment

Free - Previous Years Question Papers
Any questions? Ask us!
×