If a firm can sell as much as it wants at the going price, and loses...

If a firm can sell as much as it wants at the going price, and loses its entire sales if it raises the price above the going price:

Answers:	a) its marginal revenue is greater than the price at each quantity sold.
	b) the average revenue curve is downsloping.
	c) the average revenue curve is horizontal.
	d) the demand curve is vertical.

Solutions

Expert Solution

Option

c) the average revenue curve is horizontal

The increase in price losses entire revenue means the price is perfectly elastic and the demand curve is horizontal which means the marginal revenue curve and average revenue curve is same as the demand curve which is horizontal at a price level.

Rahul Sunny answered 2 years ago

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