This statement is referring to the concept of perfect competition in economics. In a perfectly competitive market, each firm is a price taker, meaning it cannot influence the market price. The price is determined by the overall supply and demand in the market.

Here's the step-by-step explanation:

1. In a perfectly competitive market, the price of a good or service is determined by the market, not by any individual firm. Therefore, the revenue a firm receives for each unit of the good or service it sells (i.e., its marginal revenue) is equal to the market price.

2. Average revenue is the total revenue divided by the quantity of the good or service sold. Because each unit is sold at the same price in a perfectly competitive market, the average revenue per unit is also equal to the price.

3. Therefore, in a perfectly competitive market, both the marginal revenue and the average revenue a firm receives are constant and equal to the market price. This is why the statement says "the revenue faced by the firm is equal to price, average revenue is also constant and equal to price."

Question

This statement is referring to the concept of perfect competition in economics. In a perfectly competitive market, each firm is a price taker, meaning it cannot influence the market price. The price is determined by the overall supply and demand in the market.

Here's the step-by-step explanation:

1. In a perfectly competitive market, the price of a good or service is determined by the market, not by any individual firm. Therefore, the revenue a firm receives for each unit of the good or service it sells (i.e., its marginal revenue) is equal to the market price.

2. Average revenue is the total revenue divided by the quantity of the good or service sold. Because each unit is sold at the same price in a perfectly competitive market, the average revenue per unit is also equal to the price.

3. Therefore, in a perfectly competitive market, both the marginal revenue and the average revenue a firm receives are constant and equal to the market price. This is why the statement says "the revenue faced by the firm is equal to price, average revenue is also constant and equal to price."

Knowee AI · Accepted Answer

This statement is referring to the concept of perfect competition in economics. In a perfectly competitive market, each firm is a price taker, meaning it cannot influence the market price. The price is determined by the overall supply and demand in the market.

Here's the step-by-step explanation:

1. In a perfectly competitive market, the price of a good or service is determined by the market, not by any individual firm. Therefore, the revenue a firm receives for each unit of the good or service it sells (i.e., its marginal revenue) is equal to the market price.

2. Average revenue is the total revenue divided by the quantity of the good or service sold. Because each unit is sold at the same price in a perfectly competitive market, the average revenue per unit is also equal to the price.

3. Therefore, in a perfectly competitive market, both the marginal revenue and the average revenue a firm receives are constant and equal to the market price. This is why the statement says "the revenue faced by the firm is equal to price, average revenue is also constant and equal to price."

Because the revenue faced by the firm is equal to price, average revenue is also constant and equal to price.

Question

Because the revenue faced by the firm is equal to price, average revenue is also constant and equal to price.

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