ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: –In perfect competition, the firm’s marginal revenue equals the market price.

Detailed explanation-2: -Perfect competition is an ideal type of market structure where all producers and consumers have full and symmetric information and no transaction costs.

Detailed explanation-3: -In perfect competition, any profit-maximizing producer faces a market price equal to its marginal cost (P = MC). This implies that a factor’s price equals the factor’s marginal revenue product.

Detailed explanation-4: -In perfect competition, each firm produces at a point where price (P) equals marginal revenue (MR) and average revenue (AR). As seen before, each firm does not make any economic profit in the long run. The quantity produced by each firm is also the point where the average cost (AC) equals marginal cost (MC).

Detailed explanation-5: -In the perfectly competitive market, each firm is a price-taker. All the firms have to accept the same price as determined by market forces of demand and supply. As a result, uniform price prevails in the market. It means, revenue from every additional unit (known as MR) is equal to price (AR) of the product.