For a competitive firm,
A)total revenue equals average revenue.
B)total revenue equals marginal revenue.
C)total cost equals marginal revenue.
D)average revenue equals marginal revenue.

Question

Quizplus · Accepted Answer

In a competitive market, the firm is a price taker and therefore the price (average revenue) remains constant regardless of the level of output. As a result, the marginal revenue is equal to the price (average revenue), since any additional unit sold will bring in revenue equal to the price. Therefore, average revenue equals marginal revenue in a competitive market.

For a Competitive Firm