Q.Under perfect competition average revenue is equal to :

In perfect competition price is fixed for the firm, so AR = MR = Price. Answer: (a) Marginal revenue.

Under perfect competition there are a very large number of firms selling a homogeneous product, and each firm is too small to influence the price. The firm is therefore a price-taker — it can sell as much as it likes at the single ruling market price, but nothing above it.

Because every unit is sold at the same price:

• Average Revenue (AR) = total revenue / units sold = price.
• Marginal Revenue (MR) = revenue from one extra unit = the same price (price does not fall as it sells more). …