In: Economics
Which of the followings regarding a firm in perfect competition is correct?
a. |
The firm cannot exit the market in the long run if its average cost is above market price. |
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b. |
For all firms, average revenue equals the price of the good. |
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c. |
If a firm raises its price, the firm may be able to increase its total revenue. |
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d. |
Each firm faces a downward sloping demand. |
For all firms, average revenue equals to the price of the good.
In perfectly competitive market, each firm is a price taker. All the firms have to accept the same price as determined by market forces of demand and supply. As a result uniform price prevails in the market. Therefore average revenue is equal to price for all firms.