Respuesta :
A perfectly competitive firm's marginal revenue equals the market price of its product.
Explanation:
The selling of additional units can only result in additional revenue which is obtained as basically marginal revenue. As it is understood from the firm’s demand curve that firm’s marginal revenue curve is similar to firm’s demand curve.
When one more unit is demanded by the consumer than the revenue usually hikes exactly by the amount which is equal to the market price. Marginal Revenue (MR) can calculate as:
[tex]M R=\frac{\text {variation in total revenue}}{\text {variation in quantity}}[/tex]
A perfectly competitive firm's marginal revenue equals the market price of its product when the curve of demand is horizontal at the market price level, which says that there is no effect on how much a firm can produce higher or lower but the selling price remains the same.
