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Why is Average Revenue always equal to price? |
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Answer» Average Revenue (AR) is defined as the revenue earned per unit of output sold. AR is the same as the price(P) of the output(Q). Algebraically, it can be expressed as follows: \(AR = \frac{TR}{Q}\), where TR is total revenue ⇒ \(AR = \frac{P \times Q}{Q}\) ⇒ AR = P Thus, AR is always equal to the price of the output. |
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