Q.A firm operating under perfect competition sells its product at a constant market price of ₹15 per unit. Prepare a schedule of Total Revenue, Average Revenue and Marginal Revenue for output levels 1 to 5 units, and state what the schedule shows about the relationship between AR and MR under perfect competition.

Under perfect competition the firm is a price taker, so price stays at ₹15 regardless of how much it sells; TR simply rises in step with output.

Step 1 — Total Revenue. $TR = P × Q = 15 × Q$: 15, 30, 45, 60, 75 for Q = 1 to 5.

Step 2 — Average Revenue. $AR = TR/Q$: 15/1 = 15, 30/2 = 15, 45/3 = 15, 60/4 = 15, 75/5 = 15 — constant at ₹15, equal to price at every output, as expected since $AR = P$ always.

Step 3 — Marginal Revenue. $MR = ΔTR/ΔQ$: 15 − 0 = 15; 30 − 15 = 15; 45 − 30 = 15; 60 − 45 = 15; 75 − 60 = 15 — also constant at ₹15.

Because the firm is too small to influence the ruling market price, its demand curve — and hence its AR curve — is a horizontal straight line at ₹15; MR, being the slope of a straight-line TR passing through the origin, is identical to that same horizontal line. This is why AR = MR = Price is treated as the signature revenue feature of a perfectly competitive firm.

Students sometimes expect MR to fall as output rises in every case; that only happens when price itself falls with output (imperfect competition). Under perfect competition, since price is constant, MR stays constant too — it does not automatically fall just because more units are sold.