Under what market condition does Average Revenue always equal Marginal Revenue? Explain.
Under what market condition does Average Revenue always equal Marginal Revenue? Explain.
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It is under the Perfect Market Competition when a firm can sell more at the given price that 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.
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