Q.A wheat farmer sells in a perfectly competitive market where the price is fixed at ₹5 per kg. Prepare the TR, AR and MR schedule for sales of 1 to 5 kg, and state what it shows about the relationship between AR and MR under perfect competition.

Under perfect competition the firm is a price-taker, so every unit sells at the same ₹5 and each extra unit adds exactly ₹5 to revenue.

Step 1 — Total Revenue at a constant price of ₹5.

Step 2 — Average Revenue. $AR = TR/Q = 5$ at every output, equal to the price.

Step 3 — Marginal Revenue. Each extra kg adds ₹5: $MR = TR_n - TR_{n-1} = 5$ throughout.

Step 4 — Interpretation. Because the competitive firm cannot influence price and sells all it wishes at ₹5, price does not fall as it sells more. Hence

and the AR and MR curves are the same horizontal straight line at the ruling market price. This is the defining revenue feature of perfect competition, in contrast with the falling AR and lower MR of Worked Example 1.

Cross-check. $TR = AR \times Q$ should reproduce the TR column: $5\times1=5$, $5\times4=20$, $5\times5=25$ — all match. Also, since MR is constant at ₹5, $\sum MR$ over 5 units $= 5\times5 = 25 = TR_5$, confirming the schedule.

Assuming AR must fall as output rises — true only under imperfect competition, not here. Some students draw MR below AR by habit; under perfect competition the two curves coincide. Confusing the firm's horizontal demand curve with the industry's downward-sloping market demand curve.