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#cfa-level-1 #economics #has-images #microeconomics #reading-15-demand-and-supply-analysis-the-firm #section-3-analysis-of-revenue-costs-and-profit #study-session-4
Because price is fixed to the individual seller, the firm’s demand curve is a horizontal line at the point where the market sets the price.
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Exhibit 5. Total Revenue, Average Revenue, and Marginal Revenue under Perfect Competition
Exhibit 5 graphically displays the revenue data from perfect competition. For an individual firm operating in a market setting of perfect competition, MR equals AR and both are equal to a price that stays the same across all levels of output. <span>Because price is fixed to the individual seller, the firm’s demand curve is a horizontal line at the point where the market sets the price. In Exhibit 5, at a price of 100, P 1 = MR 1 = AR 1 = Demand 1 . Marginal revenue, average revenue, and the firm’s price remain constant until market demand and supply factors cause a
Exhibit 5. Total Revenue, Average Revenue, and Marginal Revenue under Perfect Competition
Exhibit 5 graphically displays the revenue data from perfect competition. For an individual firm operating in a market setting of perfect competition, MR equals AR and both are equal to a price that stays the same across all levels of output. <span>Because price is fixed to the individual seller, the firm’s demand curve is a horizontal line at the point where the market sets the price. In Exhibit 5, at a price of 100, P 1 = MR 1 = AR 1 = Demand 1 . Marginal revenue, average revenue, and the firm’s price remain constant until market demand and supply factors cause a
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