In perfect competition, the average revenue curve of a firm is
ECONOMICS
WAEC 2019
In perfect competition, the average revenue curve of a firm is
- A. below the marginal revenue curve
- B. downward sloping
- C. the marginal revenue curve
- D. convex to the origin
Correct Answer: C. the marginal revenue curve
Explanation
For a perfectly competitive firm, the average revenue curve is a horizontal, or perfectly elastic, line. It is the same as a marginal revenue curve which is also a horizontal line at the market price, implying perfectly elastic demand.
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