How does the average revenue and marginal revenue curves of a price taking firm look like?


In the case of a price taking (competitive) firm = MR and AR arc equal and if plotted result in a horizontal straight line as shown in the diagram. For a price taking firm AR is constant at all levels of output because of that AR and MR are equal. If these conditions are not fulfilled profits will not be maximum. This can be proved geometrically and arithmetically,

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