Explain why in perfect competition marginal revenue must equal price.
Explain why in perfect competition marginal revenue must equal price.
Homework Answers
In perfect competition, there are many buyers and sellers in the market selling homogeneous products. If firms charge price less than the marginal cost then they will incur losses and if they charge more than the marginal cost then the quantity sold will be zero as other firms in the market will charge price equal to marginal cost and buyers will prefer to purchase from them at lower price since products are homogeneous. So, the only option for the firms is to charge price equal to the marginal cost. That is why price always equal marginal cost in perfect competition.
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Explain why in perfect competition marginal revenue must equal
price.
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Discuss the four characteristics of perfect competition demand curve of a perfectly competitive firm is horizontal? price? B) Want to lower your price? Explain why or why not. change when market price changes? Explain. 3. A. B.Explain which of the four characteristics is primarily responsible for the fact that the C. If you owned a firm in a perfectly competitive market would you: A) Want to raise your D.Draw the demand curve for a firm under perfect competition. Would the...
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