Question

In: Economics

In a competitive market which of the following is the firm’s demand curve? The average total...

In a competitive market which of the following is the firm’s demand curve?

The average total cost curve

The average revenue curve

The marginal revenue curve

The marginal cost curve

Solutions

Expert Solution

Option C.

  • In a competitive market, the firm's demand curve is the marginal revenue curve.
  • Competitive markets faces a horizontal demand curve at the market price which is equal to the marginal revenue curve.
  • This is because, the firms face a perfectly elasticity demand at the market price.
  • This means that, when any single firm tries to raise it's price even by one unit then it will not receive any revenue.

Rahul Sunny answered 2 years ago
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