For a price-taking firm, the market price is equal to marginal revenue and _____.
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Average Revenue.
A price-taking firm (in perfect competition) sells its product at a fixed market price — it cannot influence the price.
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The price (P) remains constant for every unit sold.
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Hence, Average Revenue (AR) = Total Revenue / Quantity = Price.
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Also, Marginal Revenue (MR) = Change in Total Revenue / Change in Quantity = Price.
Thus, for a perfectly competitive (price-taking) firm: P=AR=MR