The figure given below shows the revenue and cost curves of a firm. MC represents the marginal cost curve, AC the average cost curve, MR the marginal revenue curve, and AR the average revenue curve.Figure 9.4

-Firms under perfect competition produce:
A)homogeneous products.
B)unique products.
C)either standardized or differentiated products.
D)differentiated products.
E)antique products.

Question

The figure given below shows the revenue and cost curves of a firm. MC represents the marginal cost curve, AC the average cost curve, MR the marginal revenue curve, and AR the average revenue curve.Figure 9.4
 
-Firms under perfect competition produce:
A)homogeneous products. 
B)unique products. 
C)either standardized or differentiated products. 
D)differentiated products. 
E)antique products.

Quizplus · Accepted Answer

Firms under perfect competition produce homogeneous (or standardized) products, meaning they are identical to each other in terms of quality, design, and features. This allows for perfect substitutability between products and ensures that no firm has any market power to alter the price of the product by manipulating its features or quality. In such a case, consumers are indifferent towards any supplier and choose solely depending on price, leading to a situation where each supplier produces at a level where P = MC (the point where the marginal cost curve intersects the demand curve or average revenue curve).

The Figure Given Below Shows the Revenue and Cost Curves