For which of the following types of firms does the average revenue curve coincide with the...

For which of the following types of firms does the average revenue curve coincide with the marginal revenue curve?

- A monopolist

- An oligopoly firm

- A perfectly competitive firm

- A monopolistically competitive firm

- A monopsonist

Expert Solution

Average revenue is always equal to price.

So, average revenue curve, in a sense, indicates quantity sold at each price.

The demand curve indicates the same preposition.

Due to this, AR curve and demand curve are the same.

As we know that, in case of perfectly competitive firm, demand curve coincides with the marginal revenue curve because a perfectly competitive firm is a price taker and it can sell as much as it wants at the given price.

So, demand curve is a horizontal straight line at the given price.

With price being given, each successive unit sold brings same revenue, this results in MR curve being horizontal straight lineat the given price.

Thus, both demand curve and MR curve coincides.

Since, demand curve is same as the AR curve, it can be stated that it is in case of perfectly competitive firm does the average revenue curve coincide with the marginal revenue curve.

Thus, the correct answer is the option (3).

Rahul Sunny answered 2 years ago

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