Categories: Economics WAEC

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:

Option 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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