Price, in perfect competition: A

Economics Dec 18, 2020

Price, in perfect competition:

A. is the same as marginal revenue

B. is greater than total revenue

C. falls as output increases, in order to sell the additional output

D. is less than average revenue

Expert Solution

Increase in the total revenue from the one unit increase in the level of output is known as marginal revenue. Firms maximizing profit in perfect competition are allocatively efficient so the production of output occurs at the point where MR equals to MC. Also, all the producers face a price where the marginal cost of production equals to price. Thus. price equals to marginal revenue in a perfectly competitive market.

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