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What is the relation between (i) Market price and AR of a price taking firm ? (ii) Market price and MR of a price taking firm ? |
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Answer» SOLUTION :(i) AR EQUALS the market PRICE, as `AR=(TR)/Q` Hence `AR=(Pxx Q)/Q "" ( :. TR=PxxQ)` AR=Price (ii) As price remains constant, TR increases at the same rate. Hence price/AR=MR |
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