Saved Bookmarks
| 1. |
Under what market condition does Average Revenue always equal Marginal Revenue ? Explain. |
|
Answer» Solution :It is under the market CONDITION when a firm can SELL more at the given price, that is AR = MR throughout as production is INCREASED by the firm. It is because the firm is a price taker. It means that price, which is same as AR, remains unchanged throughout. By the average- marginal relationship, AR remains unchanged only when AR = MR throughout. Note : The question is asking about the market condition (whether price remains same or falls with rise in output) and NOT about the market form (PERFECT or Imperfect Market) |
|